MAKING BIG STRIDES FORWARD - Singapore Exchange€¦ · During the financial year, we’ve achieved great progress in our negotiations with key creditors for the debt restructuring

OCEANUS GROUP LIMITEDANNUAL REPORT 2016

MAKING BIG STRIDES FORWARD

OCEANUS GROUP LIMITED

31 Harrison Rd #11-03/04

Food Empire Building

Singapore 369649

TEL : (+65) 6285 0500

FAX : (+65) 6280 0822

WWW.OCEANUS.COM.SG

0101 1616

1717

3737

Corporate

Profile

Corporate

Information

Corporate

Governance Report

Financial

Contents

0303CEO’s

Statement

0606

1313

Board of

Directors

Senior

Management

Page 01

Oceanus Group Limited (“Oceanus”,

and together with its subsidiaries, the

“Group”), a company listed on the

Mainboard of the SGX-ST, aims to be a

global premium seafood supply chain

manager. Supported by land farms

in the People’s Republic of China, the

Group employs a science-and-evidence-

based approach to breed abalone and

premium seafood, relying on cutting-

edge aquaculture technology to monitor

and analyse breeding parameters and

statistics for effective farming.

Working closely with the brightest minds

and industry thought leaders of leading

institutions and universities, Oceanus

is committed to producing quality and

affordable premium seafood products

through sustainable farming practices,

innovation and research and development.

For more information, please visit

http://oceanus.com.sg/.

Page 02

OCEANUSGROUP LIMITED(SINGAPORE)

OCEANUS FOODGROUP LIMITED(HONG KONG)

OCEANUS FOODGROUP PTE LTD

(SINGAPORE)

OCEANUS AQUACULTURE

GROUP PTE LTD(SINGAPORE)

OCEANUS(CHINA)

AQUACULTURECO. LTD(THE PRC)

ZHANGZHOUOCEANUS FOOD

CO. LTD(THE PRC)

OCEANUS(SHANGHAI)RESTAURANTMANAGEMENT

CO. LTD(THE PRC)

SHANGHAIOCEANUS

WUJIANG ROADRESTAURANT

CO. LTD(THE PRC)

OCEANUS(SINGAPORE)RESTAURANTMANAGEMENT

PTE LTD(SINGAPORE)

OCEANUSFOOD

(HONG KONG)COMPANY LIMITED

(HONG KONG)

OCEANUS(TAIWAN)

RESTAURANTLIMITED COMPANY

(TAIWAN)

100%100% 100%

100%

OCEANUS TECH PTE LTD(SINGAPORE)

OCEANUSOCEANICINSTITUTE

(SINGAPORE)

100%

OCEANUS AUSTRALIA

ABALONE WORLD PTY LTD

(AUSTRALIA)

60% 100%

100%

100%

100%

100%

100% 100%

OCEANUSAUSTRALIA

ABALONE WORLD (S) PTE LTD (SINGAPORE)

60%

Page 03

Page 04

Dear Shareholders,

The financial year ended December 31, 2016

(“FY2016”) was an eventful year for Oceanus, as

we charted our turnaround with a clear roadmap

for growth, following efforts in 2015 to streamline

and strengthen internal processes and operations,

as well as to advance on the debt restructuring

exercise with key creditors to improve our balance

sheet.

I had on January 25, 2016 established Oceanus’

strategic direction for the years to come. Moving

beyond cost-cutting measures, it is imperative for

Oceanus to install growth engines to accelerate

the turnaround process and to ensure the long-

term viability of our business.

Business Model Transformation

From a bird’s eye view, we are transforming

ourselves beyond being a “one-product, one

country” business into a vertically integrated global

premium seafood supply chain manager, seeking

synergistic opportunities to broaden our value

chain capabilities – from upstream (hatchery)

to midstream (processing) and downstream

(retailing).

Towards this end, we have repositioned our core

abalone business to become an abalone hatchery,

working with sea farmers instead of competing with

them. We focus on our competitive advantages

and strengths as a land-based farm, supplying

sea farmers with abalone juveniles or spawns and

obtaining full-grown abalones from them at prices

that are 30% to 40% lower than what land farming

offers.

The effectiveness of this shift in strategy is reflected

in our financials – sales for live marine products

doubled to RMB6 million in FY2016 compared to

the RMB3 million recorded in the same period last

year.

These full-grown abalones are then processed

by our Australian partner, BNY Trading Pty Ltd

(“BNY”), who will then dry and can the abalones

for sale to consumers. Oceanus has the exclusive

right to sell, distribute and manage BNY’s products

and customers in all countries outside Australia.

We are pleased to work with a trusted and

reputable partner like BNY, which is registered

with the highest Grade A Processor Establishment,

in Queensland, Australia, and will progressively

explore new business opportunities with such

quality strategic partners.

Moving further downstream, we’ve entered the

consumer market with the sale of our premium

“Oceanus” branded canned abalones that have

received warm reception so far. Processed by BNY,

our canned abalones are halal-certified with no

added MSG and preservatives, and are available in

two options – pre-cooked braised sauce and clear

soup options – targeted at busy professionals and

families.

Concurrently, building upon the science-and-

evidence based approach to farming and the

robust internal risk-management processes put in

place since 2015, we are looking to place strong

emphasis on the development and employment of

advanced, cutting edge production and farming

technologies.

Not only does this greatly improve production

efficiency, breeding success rate and survival of

our biological assets, being at the forefront of

farming technologies will pave the way for us to

create new revenue streams for consulting work or

management solutions.

En-Route To A Clean Slate: Balance Sheet

During the financial year, we’ve achieved great

progress in our negotiations with key creditors for

the debt restructuring exercise. We announced in

September 2016 that two of three key creditors

have signed a binding term sheet to convert

S$54.2 million of outstanding debt into Oceanus

shares.

Page 05

Subsequent to the financial year end, we

announced in July 2017 that all three key creditors

have signed a binding term sheet to convert

S$64.7 million, or 80.3% of our outstanding debt,

into new ordinary shares, leaving us with S$20

million of debt remaining.

As announced on March 6, 2017, the balance debt

of S$20 million will be paid from net proceeds

received from the sale of our land farms in the PRC

back to the local authorities – marking a giant leap

for Oceanus towards being a debt-free company.

As a vote of confidence for the progress of our

turnaround and for our growth potential, we’ve

attracted new investors who will inject S$6 million

of fresh funds via the subscription of new Oceanus

shares, building an adequate war chest to pursue

our new businesses.

We will be seeking shareholders’ approval for the

debt restructuring exercise at an extraordinary

general meeting to be convened on October 31,

2017. We look forward to the support from our

shareholders as we collectively work towards

Oceanus recovery and growth.

Words Of Appreciation

As we are making big strides towards Oceanus

turnaround, we are maintaining a long-term view

to ensure the long-term sustainability of our

businesses while expanding prudently to protect

shareholders’ interests.

We have been navigating rocky waters these past

few years, and the progress made so far couldn’t

have been possible without the strong support

of our loyal shareholders, partners, suppliers,

stakeholders, as well as the hard work of our

employees.

We’d like to take the opportunity to thank the

aforementioned as we look forward to rebuilding

Oceanus upon reinforced foundations and our

eventual exit from the watch-list as we work hard

towards enhancing profitability.

Yours Sincerely,

Peter H.K. Koh, PBM

Chief Executive Officer

BOARD OFDIRECTORS

Page 07

Mr Peter H.K. Koh, PBMChief Executive Officer

Mr Peter H.K. Koh was appointed Chief Executive Officer of the Group in December 2014. Mr Koh

has been instrumental in driving the strategic direction and development of the Group’s businesses

since his appointment, and plays a pivotal role in the Group’s diversification and expansion.

Prior to Mr Koh’s appointment at Oceanus, he had spent 22 years building a branding company

he founded, which has a business presence across three continents. Mr Koh was involved in the

day-to-day operations and developments of his company’s business divisions – namely, Media

Productions, Interactive, Visual Designs and Merchandising. Under his leadership, the company had

ventured into Original Equipment Manufacturing (OEM) for major retail brands and is also amongst

the first few to be selected by the Singapore Media Development Authority to produce HD format

TV infotainment programmes. He led the Merchandising division in securing licensing rights for

the FIFA 2006 World Cup, and in 2009, the company won The Summit International Award for

marketing effectiveness in the USA.

Mr Koh sold the overseas operations seven years ago and divided his time between charities and

investments. After a five-year break, Mr Koh returned to the business community in December 2014

when he was appointed Group CEO of Oceanus Group Limited.

Mr Koh’s past and present directorships include PT. Kertas Blabak, Indonesia’s fourth largest

recycle paper mill; Eagle Coin, a joint venture with China’s largest food manufacturer and State

Owned Enterprise; as well as being appointed Investment Advisor to the Sino-Indian Conglomerate

Ramky-Revo for their overseas investments.

An astute entrepreneur, Mr Koh also actively champions social causes and was conferred the Public

Service Medal in 2014. He currently sits on the council of the North West Community Development

Council. His previous appointments include sitting on the Advisory Board of the National Youth

Council’s National Youth Award, Chairman of Rotary Club of Singapore Vocational that oversees

the Rotary-ASME Entrepreneur of the Year Award, Councilor at Central Singapore Community

Development Council and Singapore Community Chest Share Committee.

Page 08

Mr Yeo Kan Yen, AlvinLead Independent Director

Mr Yeo Kan Yen, Alvin was appointed to the Board as Independent Director of the Company,

Chairman of the Audit Committee and member of the Remuneration Committee on 31 July 2013.

Mr Yeo had previously held various leadership appointments including Chief Operating

Officer and Executive Director of SGX-Iisted CarrierNet Global Ltd.; Regional Sales Manager at

Nagamei Marine Pte. Ltd.; Chief Operating Officer of Indonesia-based PT. Atlasat Solusindo; and

Regional Sales Manager of Hong Kong-based system integration company, Prudential Capital

Technologies (China) Limited.

Mr Yeo graduated with a Master of Science degree in Information Systems, majoring in

Information Systems Management from the Hawaii Pacific University, Honolulu, Hawaii; and

a Bachelor degree in Business Administration majoring in Accounting from the University of

Hawaii at Manoa, Honolulu, Hawaii.

Page 09

Mr Kee Poir MokIndependent Director

Mr Kee Poir Mok was appointed to the Board as Non-Executive Director

on 31 July 2013 and was re-designated as an Independent Director with

effect from 08 June 2015.

Mr Kee is currently the Managing Partner of 125 Capital LLP, an Investment

Management company.

Prior to that, Mr Kee was Regional Manager and Managing Director of

Goldman Sachs, and also sat on the Board of Goldman Sachs Singapore

Pte Ltd from 2003 to 2008. In addition to his 20 years of experience

at Goldman Sachs, he also served managerial roles specialising in

investments at Nikko Merchant Bank (Singapore) and United Overseas

Bank (Singapore). Mr Kee was also an Independent Director of Yuuzoo

Corp from December 2014 to May 2015.

Mr Kee graduated with a Bachelor of Business Administration from the

National University of Singapore.

Page 10

Mr Wong Ann Chai Independent Director

Mr Wong Ann Chai was appointed to the Board as a Non-Executive Director

on 13 April 2015 and was re-designated as an Independent Director with effect

from 08 June 2015.

Mr Wong is currently Managing Director and co-founder of Nanosun Pte Ltd,

a high technology water membrane producer and water treatment system

design company specialising in drinking, industrial waste water, and also food

processing with anti-bacterial properties.

Mr Wong was an investment banker at DBS bank as Managing Director of

Equity Capital Markets and Nomura Investment Bank as Executive Director.

Mr Wong provided advisory on IPOs, rights issues and corporate finance for

companies in financial institutions, technology and manufacturing industries.

Mr Wong also served on the boards of the Bank of the Philippine Islands and

DBS-Cholamandalam Finance Limited and Market Risk Committee.

Mr Wong served in the Administrative Service and was awarded the PPA

(Silver) for his contributions. Mr Wong holds degrees from the University of

Oxford (UK) and Massachusetts Institute of Technology (USA). He has served

on the Boards of Spring Singapore (Ministry of Trade & Industry), Nanyang

Business School Advisory, ST Electronics (ISS), Chartered Electro-Optics,

ST Aerospace (Supplies), Defence Finance Supervision, Community Chest, and

SP Corporation Ltd (SGX).

Page 11

Mr JasonAleksander Kardachi Non-Executive Director

Mr Jason Aleksander Kardachi was appointed as a Non-Executive Director of Oceanus

Group Limited on 13 April 2015.

Mr Kardachi has served as a Director of PT Berlian Laju Tanker Tbk from 19 March 2014

to 20 July 2016 and has served as a Director of PT Trikomsel Oke Tbk since 22 June 2017.

Previously, Mr Kardachi served as the Managing Partner of Teak Capital Partners Pte Ltd

from 2007 to 2010, Head of Special Solutions at HSBC from 2006 to 2007 and Senior

Manager at PricewaterhouseCoopers from 2001 to 2006.

Mr Kardachi has over 20 years of experience in corporate advisory and restructuring in

Asia Pacific. Mr Kardachi is a Chartered Accountant and graduated from University of

Adelaide, Australia, with a Bachelor of Commerce and Bachelor of Economics.

Page 12

Mr Stephen LeeNon-Executive Director

Mr Stephen Lee was appointed as a Non-Executive Director of the

Company on 13 April 2015.

Mr Stephen Lee joined AIF Capital in 1994 and has led investments in

media, transportation, pharmaceuticals, power, telecommunication,

new material and transportation sectors across China, Hong Kong,

Taiwan, India, Indonesia, Singapore, Malaysia, the Philippines

and South Korea. He has over 23 years of private equity, direct

investment and industry experience and represents AIF Capital on

the boards of various portfolio companies.

Prior to AIF Capital, Mr Lee worked for the City of North York

in Toronto as an Urban Development Engineer and Unibrite

Corporation, Toronto, where he was a Director responsible for

real estate investments, land development feasibility studies and

financing strategies.

Mr Lee graduated from the University of Toronto, Canada, with a

B.Sc. degree in Civil Engineering, an M.E. in Transportation & Urban

Planning and an M.B.A. He is a professional engineer, a CFA charter

holder and a SEPC graduate from Harvard Business School. Mr Lee

is fluent in Cantonese and Mandarin.

SENIORMANAGEMENT

Page 14

A/Prof Matthew TanChief Executive Officer, Oceanus Tech Pte Ltd

Associate Professor Matthew Tan is currently the

Chief Executive Officer and Director of Oceanus

Tech Pte Ltd, which is a wholly owned subsidiary

of Oceanus Group.

A/Prof Tan was previously holding the joint

appointment of Chief Technology Officer in the

holding company (from Sept’13 to Oct’17) until his

recent appointment as CEO of Oceanus Tech. In

his current capacity, he will continue to provide

technical oversight to the holding company.

A/Prof Tan is a veteran in the aquaculture industry

and is responsible for the development of the

company’s Risk Management framework and

farms’ operational protocols and oversaw the

development and implementation of the company

farm’s Bio-security plan which includes the

validation & adoption of sustainable technologies,

implementation of water monitoring system, animal

nutrition & feed formulation and use of Recirculating

Aquaculture technologies in their farms.

Alongside Oceanus Group push towards

consolidating and standardising its operational

procedures, he is also in the midst of developing

the Group’s operations manual to enable the

smooth operations of its Bio-secured facilities.

Oceanus Tech is the Research & Development arm

of the holding company. Its primary responsibilities

are as follow:

– Acquisition and adoption of proven cutting

edge technologies for use in aquaculture

– Collaboration with tertiary institutions

– Test bedding of new technologies on a

commercial platform

– Acquisition or licensing of relevant technologies

– Provision of consultancy services to our

partners and the industry

A/Prof Tan brings a wealth of experience to the

Oceanus Group. He was previously the CEO of an

environmental engineering company (10 years

plus) where he has been involved in the extensive

implementation of engineering solutions to waste

water and aquaculture industry in both Singapore

and Asia.

He has a vision of developing evidence-based

science and technology that is both ECO friendly

and sustainable. In the past 10 years, he has been

extensively involved in application development

for the aquaculture industry and has successfully

developed a set of land based protocols for the

sustainable farming of food-fish in Singapore.

As Singapore Representative (private sector) to

APEC PPFS (Asia Pacific Economic Cooperation

– Policy Partnership for Food Security), A/Prof

Tan is also currently the Co-Chair of the APEC

PPFS Working group responsible for Sustainable

Development in Agriculture and Fisheries sectors. In

his capacity as Co-Chair, he co-ordinates discussions

between APEC governments and the private sector

on the use of technology and combined resources

for Sustainable Development of Agriculture and

Fisheries Sectors within the APEC region.

A/Prof Tan is also graduate of SEAFDEC (Southeast

Asian Fisheries Development Centre) – Asia’s leading

fishery institution; where he received training under

a Government of Japan – Trust Fund Fellowship

Programme in hatchery and grow-out, sea weed

and Benthic Diatom culture and production.

In addition to his professional commitments, he

is also currently serving as an Adjunct Associate

Professor (Aquaculture) and Senior Research

Fellow (ADJ) with the Centre for Sustainable

Tropical Fisheries and Aquaculture (CSTFA) –

College of Science and Engineering, James Cook

University Australia. He was also previously serving

as an Associate Professor (ADJ) with School of

Chemical and Biomedical Engineering, Nanyang

Technological University.

Current external appointments:

1. Expert Member – Aquaculture: National Mirror

Working Group for ISO TC 281 – SMF Standards

Development Organisation.

2. Advisor (HON) – Centre for Aquaculture and

Veterinary Science, School of Applied Science,

Temasek Polytechnic.

3. School Advisory Committee member: School of

Applied Sciences (SAS), Republic Polytechnic.

Page 15

Ms Tan May LingFinancial Controller

Ms Tan May Ling was appointed Group Financial Controller on

1 February 2017 and is responsible for overseeing all accounting,

financial and corporate secretarial matters of the Group.

A veteran with close to four decades of industry experience, Ms Tan

has held several finance and accounting roles in companies of various

sizes, ranging from small-medium enterprises to multinational

corporations including Samco Civil Engineering Pte Ltd, Fusion

Cosmetics Pte Ltd, Trade Alliance (S) Pte Ltd, and Borneo Sumatra

Trading Co (S) Pte Ltd. Over the years, Ms Tan has amassed deep

experience and capabilities in the areas of audit, taxation, GST and

secretarial matters.

Ms Tan holds a Graduate Diploma in Financial Management from the

Singapore Institute of Management.

T

Page 16

DIRECTORS

EXECUTIVE DIRECTOR AND CEO

Peter Koh Heng Kang

INDEPENDENT DIRECTORS

Yeo Kan Yen, Alvin

Kee Poir Mok

Wong Ann Chai

NON-EXECUTIVE DIRECTORS

Jason Aleksander Kardachi

Stephen Lee

AUDIT COMMITTEE

Yeo Kan Yen, Alvin (Chairman)

Stephen Lee

Kee Poir Mok

NOMINATING COMMITTEE

Wong Ann Chai (Chairman)

Yeo Kan Yen, Alvin

Kee Poir Mok

Stephen Lee


REMUNERATION COMMITTEE

Wong Ann Chai (Chairman)

Yeo Kan Yen, Alvin

Kee Poir Mok

Stephen Lee


COMPANY SECRETARIES

Raymond Lam Kuo Wei

Shee Shin Yee

REGISTERED OFFICE

31 Harrison Road

#11-03/04 Food Empire Building

Singapore 369649

Tel: (65) 6285 0500

Fax: (65) 6280 0822

www.oceanus.com.sg

REGISTRAR

Boardroom Corporate &

Advisory Services Pte Ltd

50 Raffles Place

#32-01 Singapore Land Tower

Singapore 048623

BANKERS

HL Bank Ltd

DBS Bank Ltd

Agricultural Bank of China

AUDITOR

Foo Kon Tan LLP

Public Accountants and

Chartered Accountants

24 Raffles Place

#07-03

Clifford Centre

Singapore 048621

Partner-in-charge:

Toh Kim Teck

(since financial year 2014)

CORPORATEGOVERNANCE

REPORT

Page 18

Corporate Governance Report

The Board of Directors (the “Board”) and Management of Oceanus Group Limited (the “Company”)

are committed to maintaining a high standard of corporate governance and the offering of high

standards of accountability to the shareholders of our Company by complying with the benchmark

set by the Code of Corporate Governance 2012 (the “Code”) where it is applicable and practical

to the Group in the context of the Group’s business and organisation structure.

This report sets out the corporate governance practices that have been adopted by the Company

with specific reference to the principles and guidelines of the Code, the Listing Manual of the

Singapore Exchange Securities Trading Limited (“SGX-ST”) and the Companies Act (Cap. 50) of

Singapore (“Act”) where applicable, except where otherwise stated.

BOARD MATTERS

Principle 1: The Board’s Conduct of its Affairs

Every company should be headed by an effective Board to lead and control the company. The

Board is collectively responsible for the long-term success of the company. The Board works with

Management to achieve this objective and Management remains accountable to the Board.

The Board is entrusted with the responsibility for the overall management of the business,

corporate affairs, corporate governance, strategic direction, formulation of policies and overseeing

the investment and business of the Group.

The Board will meet on a quarterly basis and ad-hoc Board meetings will be convened when

they are deemed necessary. In between Board meetings, other important matters will be put to

the Board’s approval by way of circulating resolutions in writing. The Company’s Constitution

provide for meetings of Directors to be held by means of telephone conference or other methods

of simultaneous communication by electronic or other means.

Matters which specifically require the Board’s decision or approval are those involving:

• corporate strategy and business plans;

• investment and divestment proposals;

• funding decisions of the Group;

• nomination of Board and appointment of key personnel;

• quarterly and full year results announcements, the annual report and accounts;

• identification of the key stakeholder groups and review of the effect of their perception on

the Company’s reputation;

• sustainability issues as part of its strategic formulation;

• material acquisitions and disposal of assets; and

• all matters of strategic importance.

Page 19


All other matters are delegated to board committees (“Board Committees”) whose actions are

monitored and endorsed by the Board. These committees include the Audit Committee (“AC”),

the Nominating Committee (“NC”) and the Remuneration Committee (“RC”), which operate within

clearly defined and written terms of reference and functional procedures.

The number of meetings held and the attendance at meetings of the Board and Board Committees

by the previous and present Directors of the Company during the financial year end 31 December

2016 are, as follows:

Board

Audit

Committee

Nominating

Committee

Remuneration

Committee

Number of meetings held 5 4 1 1

Number of meetings attended

Ng Cher Yew(1) 5 N.A. 1 N.A.

Peter Koh Heng Kang 4 N.A. N.A. N.A.

Stephen Lee 5 4 1 1

Kee Poir Mok 5 4 1 1

Yeo Kan Yen, Alvin 5 4 1 1

Wong Ann Chai 5 N.A. 1 1

Jason Aleksander Kardachi 5 N.A. 1 1

Notes:

(1) Dr Ng Cher Yew resigned as the Non-Executive Chairman of the Company with effect from 15 February 2017.

N.A. Not applicable

Board members have been and will be encouraged to attend seminars and receive training to

improve themselves in the discharge of their duties as Directors. The Company will work closely

with professionals to provide its Directors with updates on changes to relevant laws, regulations

and accounting standards.

The newly appointed Directors are given an orientation on the Group’s business strategies and

operations. Directors also have the opportunity to visit the Group’s operating facilities and

meet with Management to gain a better understanding of the Group’s business operations and

governance practices. All Directors who had no prior experience as Directors of a listed company

have undergone training and briefing on the roles and responsibilities as Directors of a listed

company.

Further, Non-Executive Directors and Independent Directors are routinely briefed by the Executive

Directors or Management at Board meetings or at separate sessions on business developments of

the Group. Non-Executive Directors and Independent Directors, either individually or as a group,

have full access to the Executive Directors, Management and the Company Secretary.

Page 20


Principle 2: Board Composition and Guidance

There should be a strong and independent element on the Board, which is able to exercise

objective judgment on corporate affairs independently, in particular, from Management and

10% shareholder. No individual or small group of individuals should be allowed to dominate the

Board’s decision making.

As at the date of this Annual Report, the Board comprises the following directors:

Mr Peter Koh Heng Kang Executive Director and Chief Executive Officer

Mr Stephen Lee Non-Executive Director

Mr Jason Aleksander Kardachi Non-Executive Director

Mr Yeo Kan Yen, Alvin Lead Independent Director

Mr Kee Poir Mok Independent Director

Mr Wong Ann Chai Independent Director

The profile of each member of the Board is found in the “Board of Directors” section of this Annual

Report.

The Board currently comprises three (3) Independent Directors, namely Mr Yeo Kan Yen, Alvin,

Mr Kee Poir Mok and Mr Wong Ann Chai, one (1) Executive Director, namely Mr Peter Koh Heng

Kang, and two (2) Non-Executive Directors, namely Mr Stephen Lee and Mr Jason Aleksander

Kardachi. The NC has examined its size and is satisfied that the current board size of six (6)

Directors is an appropriate size for effective decision making, taking into account the nature and

scope of the Company’s operations.

The Company endeavors to maintain a strong and independent element on the Board. The Board

considers that there is a strong independent element in the Board as the number of Independent

Directors represent half of the Board as at the date of this Annual Report.

The Board considers an “Independent Director” as one who has no relationship with the Company,

its related companies, its 10% shareholders or its officers who could interfere, or be reasonably

perceived to interfere, with the exercise of the Director’s independent judgment in the conduct of

the Group’s affairs. The Board believes it is able to exercise independent judgment on corporate

affairs and provide Management with a diverse and objective perspective on issues. Each

Independent Director is required to complete a confirmation of independence annually to confirm

his independence based on the guidelines as set out in the Code. The Independent Directors have

confirmed that they do not have any relationship with the Company or its related companies

or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of

the Directors’ independent business judgment with a view to the best interests of the Company.

Consideration is given to guideline 2.4 of the Code which states the independence of any Director

who has served on the Board beyond nine (9) years from the date of his first appointment be

subject to particularly rigorous review by the NC. The independence of each Director has been

and will be reviewed annually by the NC. The NC has reviewed and determined that the said

Directors are independent. There are no Independent Directors who have served on the Board

beyond nine (9) years.

Page 21


The Board has examined its size and is satisfied that it is an appropriate size for effective decision-

making, taking into account the scope and nature of the operations of the Company.

The Nominating Committee is of the view that the current Board comprises persons who as a

group provide capabilities required for the Board to be effective. Details of the Board members’

qualifications and experience are presented in this Annual Report under the heading “Board of

Directors”.

Principle 3: Chairman and Chief Executive Officer

There should be a clear division of responsibilities between the leadership of the Board and the

executives responsible for managing the company’s business. No one individual should represent

a considerable concentration of power.

In the Code, the roles and responsibilities of the Chairman and Chief Executive Officer are

separate, serving to institute an appropriate balance of power and authority.

Dr Ng Cher Yew was the Executive Chairman and was redesignated as Non-Executive Chairman

with effect from 30 November 2015, whilst Mr Peter Koh Heng Kang holds the position of Chief

Executive Officer (“CEO”) and Executive Director of the Company. Dr Ng resigned as the

Non-Executive Chairman on 15 February 2017.

The Chairman is responsible for the following:

• providing effective leadership to the Board in relation to all Board matters;

• guiding the agenda and conducting all Board meetings;

• in conjunction with the Company Secretaries, arranging regular Board meetings throughout

the year, confirming that minutes of meetings accurately record decisions taken and, where

appropriate, the views of individual Directors;

• overseeing Board succession;

• acting as a conduit between Management and the Board, and being the primary point of

communication between the Board and the Management;

• setting the agenda and ensure that adequate time is available for discussion of all agenda

items, in particular strategic issues;

• promoting a culture of openness and debate at the Board; and

• representing the views of the Board to the public.

The CEO is responsible for the day-to-day operations and management of the Group, as well as

the overall strategic policies and directions of the Company. The CEO and Management of the

Company are accountable to the Board for the conduct and performance of the operations of the

Group. The responsibilities of the CEO and the Chairman are clearly separated and delineated to

ensure an appropriate balance and separation of power.

Page 22


The Company has appointed Mr Yeo Kan Yen, Alvin is the Lead Independent Director of the

Company. As Lead Independent Director, Mr Yeo Kan Yen, Alvin serves as the leader of the

Independent Directors in raising queries and takes up matters where circumstances required. Led

by the Lead Independent Director, the Independent Directors should meet periodically without

the presence of the Executive Directors and Management, and the Lead Independent Director

should provide feedback to the Chairman after such meetings.

Principle 4: Board Membership

There should be a formal and transparent process for the appointment and re-appointment of

directors to the Board.

The NC of the Company currently comprises three (3) Independent Directors, namely Mr Yeo

Kan Yen, Alvin, Mr Wong Ann Chai and Mr Kee Poir Mok, two (2) Non-Executive Directors, namely

Mr Stephen Lee and Mr Jason Aleksander Kardachi. Mr Wong Ann Chai is the Chairman of the NC.

The principal role and functions of the NC are, as follows:

– to make recommendations to the Board on all board appointments and re-nominations having

regard to the Director’s contribution and performance;

– to make recommendations to the Board on the review of board succession plans for Directors,

Chairman and CEO;

– to make recommendation to the Board on the development on board evaluation performance;

– to make recommendations to the Board on the review of training and professional development

program for the Board;

– to make recommendations to the Board on the appointment and re-appointment of Directors;

– to ensure that all Directors submit themselves for re-nomination and re-election at regular

intervals and at least once every three years;

– to determine annually whether a Director is independent, taking into account the definition

of an Independent Director in the Code;

– to decide whether a Director is able to and has adequately carried out his duties as a

Director of the Company, in particular, where the Director concerned has multiple board

representations;

– to assess the effectiveness of the Board as a whole and the contribution by each Director to

the effectiveness of the Board; and

– to carry out such other duties as may be agreed to by the NC and the Board.

The NC will ensure that there is a formal and transparent process for all appointments to the

Board. It has adopted a written terms of reference defining its membership, administration and

duties. A meeting has been held to review the independent status of each Independent Director.

Page 23


The Constitution requires one-third (1/3) of the Directors (except the Managing Director) to retire

from office at least once every three years at an AGM and the retiring Directors are eligible to

offer themselves for re-election. The re-election of each is voted on separately at the AGMs. To

assist shareholders in their decision, information such as personal profile and meetings attendance

of each Director standing for election are furnished in the various sections of this Annual Report.

The Code requires listed companies to fix the maximum number of board representations on

other listed companies that their directors may hold and to disclose this in their annual report.

In determining whether each Director is able to devote sufficient time to discharge his duties,

the Board has taken cognizance of the Code requirement, but is of the view that its assessment

should not be restricted to the number of board representations of each Director and their

respective principal commitments in itself. Holistically, the contributions by our Directors to and

during meetings of the Board and the AC as well as their attendance at such meetings should

also be taken into account.

Although the Independent Directors hold directorships in other companies which are not in the

Group, the Board is of the view that such multiple board representations do not hinder them

from carrying out their duties as Directors. These Directors would widen the experience of the

Board and give it a broader perspective. The NC is satisfied that these Directors have been

able to devote adequate time and attention to fulfill their duties as Directors of the Company,

notwithstanding their multiple board representations and other principal commitments. There is

no alternate director appointed to the Board.

Principle 5: Board Performance

There should be a formal assessment of the effectiveness of the Board as a whole and its Board

Committees and contribution of each director to the effectiveness of the Board.

The NC reviews the criteria for evaluating the Board’s performance and effectiveness as a whole

and the performance of individual Directors, based on performance criteria set by the Board.

Based on the recommendations of the NC, the Board has established formal assessment process

to assess the effectiveness of the Board as a whole where a performance evaluation questionnaire

will be circulated and completed by each Director. The review of the performance of the Board

is undertaken collectively by the Board annually and informally on a continuous basis by the NC

with input from the other Board members.

The individual performance criteria include qualitative and quantitative factors such as attendance

and participation in and outside the meetings, performance of principal functions and fiduciary

duties, intervention and industry and business knowledge.

During the financial year under review, the NC is satisfied that each Director has contributed

effectively and demonstrated commitment to their respective role and the Board as a whole has

also met the performance evaluation criteria and objectives.

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Principle 6: Access to Information

In order to fulfill their responsibilities, directors should be provided with complete, adequate and

timely information prior to board meetings and on an on-going basis so as to enable them to

make informed decisions to discharge their duties and responsibilities.

Each member of the Board has access to such information regarding the Company as may be

required for the discharge of his duties and responsibilities. Prior to each Board meeting, the

members of the Board are each provided with the relevant documents and information necessary,

including background and explanatory statements, financial statements together with background

and explanatory statements, budgets, forecasts and progress reports of the Group’s business

operations, for them to comprehensively understand the issues to be deliberated upon and make

informed and timely decisions thereon.

As a general rule, notices are sent to the Directors in advance of Board meetings, followed by

the Board papers in order for the Directors to be adequately prepared for the meetings. Senior

management personnel if required will attend board meetings to address queries from the

Directors. The Directors also have unrestricted access to the Company’s senior management.

The Directors have separate and independent access to the Company Secretary. The Company

Secretary attends Board meetings and ensures that Board procedures and the provisions of

applicable laws, the Constitution and the Listing Manual of the SGX-ST are followed and that

proper minutes of the same are taken and kept. The appointment and removal of the Company

Secretary is a matter for the Board as a whole.

REMUNERATION MATTERS

Principle 7: Procedures for Developing Remuneration Policies

There should be a formal and transparent procedure for developing policy on executive

remuneration and for fixing the remuneration packages of individual directors. No director should

be involved in deciding his own remuneration.

The RC of the Company currently comprises three (3) Independent Directors, namely Mr Wong

Ann Chai, Mr Yeo Kan Yen, Alvin and Mr Kee Poir Mok and one (1) Non-Executive Director, namely

Mr Stephen Lee. Mr Wong Ann Chai is the Chairman of the RC.

The principal role and functions of the RC are, as follows:

– to recommend to the Board a framework of remuneration for the directors and senior

management;

– to determine specific remuneration packages for each executive director;

– in the case of service contracts of directors, to review and to recommend to the Board the

terms of renewal of the service contracts;

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– to consider the various disclosure requirements for directors’ and key executives’

remuneration, particularly those required by regulatory bodies such as the SGX-ST, and

ensure that there is adequate disclosure in the financial statements to ensure and enhance

transparency between the Company and relevant interested parties;

– to review the Company’s obligation arising in the event of termination of the executive

directors’ and key management personnel’s contracts of service, to ensure that such

contracts of service contain fair and reasonable termination clause which are not overly

generous; and

– to carry out such other duties as may be agreed to by the RC and the Board.

The RC had been established for the purposes of ensuring that there is a formal and transparent

procedure for fixing the remuneration packages of individual Directors. All aspects of the

remuneration, including but not limited to Directors’ fees, salaries, allowances, bonuses and

benefits in kind will be reviewed by the RC. The overriding principle is that no Director should be

involved in deciding his own remuneration.

The RC members are familiar with executive compensation matters as they manage their own

businesses and/or are holding directorships in other listed companies. The RC has access to advice

regarding executive compensation matters, if required.

Principle 8: Level and Mix of Remuneration

The level and structure of remuneration should be aligned with the long-term interest and

risk policies of the Company and should be appropriate to attract, retain and motivate (a) the

directors to provide good stewardship of the Company, and (b) key management personnel

to successfully manage the Company. However, companies should avoid paying more than is

necessary for this purpose.

In setting remuneration packages, the RC will ensure that the Directors are adequately but not

excessively remunerated as compared to the industry and comparable companies.

The remuneration packages for Executive Director and the key management personnel take into

account the performance of the Group and the individual. The Director’s fees for Non-executive

Directors are based on the effort, time spent and responsibilities of the Non-executive Directors,

subject to approval of the shareholders of the Company at AGMs.

The Company is also currently exploring the feasibility of putting in place employee share option

and/or performance share schemes, as a motivational tool to recruit and retain talented senior

executives and reward for the Group and individual performance, as well as enhance the Group’s

overall compensation packages to attract and retain high performing talent.

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Principle 9: Disclosure on Remuneration

Every company should provide clear disclosure of its remuneration policies, level and mix of

remuneration, and the procedure for setting remuneration in the company’s annual report. It

should provide disclosure in relation to its remuneration policies to enable investors to understand

the link between remuneration paid to directors and key management personnel, and performance.

The RC recommends to the Board a framework of remuneration for the Board and senior

management personnel to ensure that the structure is fair and competitive, keeping with

industry practices yet sufficient to attract, retain and motivate senior management to run the

Company successfully in order to maximize shareholders’ value. The recommendations of the

RC on the remuneration of Directors and senior management will be submitted for endorsement

by the Board. The members of the RC do not participate in any decisions concerning their own

remuneration.

Generally, the nature of the role performed and market practice are taken into consideration in

determining the composition of the remuneration package for each of its staff. For key executive

officers, the Company adopts a performance-driven approach to compensation with rewards

linked to individual, team and corporate performance.

The breakdown, showing the level and mix of each individual Director’s remuneration in

percentage term for the financial year ended 31 December 2016 is, as follows:

Remuneration Band and

Name of Director

Base/Fixed

salary

Directors

fees

Variable or

performance

benefits related

income/Bonus

Other

Benefits

S$250,000 to below S$500,000

Peter Koh Heng Kang 92.3% – 7.7% –

Below S$250,000

Yeo Kan Yee, Alvin – 100% – –

Kee Poir Mok – 100% – –

Stephen Lee – 100% – –

Jason Aleksander Kardachi – 100% – –

Wong Ann Chai – 100% – –

The top executive (who was not Director) of the Group during the financial year ended

31 December 2016 fell within the remuneration band of below S$250,000:

– Matthew Tan – Chief Risk Officer cum Chief Technology Officer (“CRO cum CTO”)*

Note:

*Professor Tan ceased to be the CRO cum CTO of the Group with effect from 1 November 2017

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The aggregate remuneration paid to the above key management personnel (who is not Directors

or the CEO) for the financial year ended 31 December 2016 is S$41,000. There is no other key

executives except for the abovementioned.

The remuneration of the Directors and the CEO is not disclosed to the nearest thousand dollar

in this report as the Company and Management have concerns that disclosing the detailed

breakdown of the remuneration of the directors and the CEO may compromise sensitive

information to the Company’s competitors, having regard to the highly competitive industry

conditions and the sensitivity and confidentiality of remuneration matters.

The Directors’ fees paid to Independent Directors are also reviewed by the RC to ensure that

the remuneration commensurate with the contributions, responsibilities of the Directors and the

need to pay competitive fees to attract and retain the Directors. Director fees recommended to

the Board for payment are subject to the shareholders’ approval at each AGM. The remuneration

for the Executive Directors and the key Management comprises salary and bonus that is linked to

the performance of the Company and individual. The above actions enable the Company to align

the remuneration of Directors and key Management with long-term interest and risk policies of

the Group, which serves to attract and motivate the directors to provide good stewardship of the

Company and key management personnel to successfully manage the Company.

Mr Robert Koh Keng Guan brother of Mr Peter Koh Heng Kang, is the Operations Director (China

Operations) of a wholly-owned subsidiary of the Company and his annual remuneration is within

the band of S$50,000 to S$100,000 for the financial year ended 31 December 2016. He was

the Country Manager (China Operations) and was promoted as Operations Directors (China

Operations) on 1 June 2017.

ACCOUNTABILITY AND AUDIT

Principle 10: Accountability

The Board should present a balanced and understandable assessment of the company’s

performance, position and prospects.

In line with the continuing disclosure obligations of the Company under the SGX-ST Listing

Manual, the Board’s policy is that shareholders shall be informed of all major developments of the

Company. Information is presented to shareholders on a timely basis through SGXNet and/or the

press. In presenting the interim, half yearly and annual financial statements to its shareholders, the

Board, with the assistance of the management, strives to provide a balanced and understandable

assessment of the Company’s performance, position and prospects. The Board also undertakes

such effort in respect of other price sensitive public reports and reports to regulators, where

required.

The Board is mindful of its obligations to provide shareholders with a comprehensive view of the

Company’s financial performance, position and prospects on a timely basis that would allow a

balanced and understandable assessment of the Group’s financial position and prospects. The

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Audit Committee has been tasked to review the Company’s financial information to ensure that the

objective is met. The Board will update the shareholders on the operations and financial position

of the Company through quarterly and full year announcements as well as timely announcements

of other matters as prescribed by the relevant rules and regulations.

The Management currently provides the Board with appropriately detailed management accounts

and such explanation and information on a regular basis and as the Board may require from

time to time to enable the Board to make a balanced and informed assessment of the Group’s

performance, position and prospects.

Principle 11: Risk Management and Internal Controls

The Board is responsible for the governance of risk. The Board should ensure that Management

maintains a sound system of risk management and internal controls to safeguard shareholders’

interests and the company’s assets, and should determine the nature and extent of the significant

risks which the Board is willing to take in achieving its strategic objectives.

The Group’s internal control system is designed to provide reasonable assurance as to the

integrity and reliability of the financial information and to safeguard and maintain accountability

of assets. Procedures are in place to identify major business risks and evaluate potential financial

effects, as well as for the authorisation of capital expenditure and investments.

The AC is assisted by Management (the Executive Director, the CRO cum CTO, the Country

Manager, (China Operation)) and the work performed by the external auditors, carry out, an

annual review of the adequacy and effectiveness of the Group’s key internal controls, including

financial, operational and compliance and information technology controls as well as risk

management to the extent of their scope as laid out in their audit plan. In addition, annual

review to ensure that safeguards, checks and balances are put in place to prevent any conflicts

of interest or any weakening of internal controls. Any material weaknesses in internal controls,

together with recommendation for improvement, are reported to the AC. The AC also reviews the

effectiveness of the actions taken by Management on the recommendations made by the external

auditors in this respect. To facilitate the AC, external auditors to make an informed assessment

of the Group’s internal controls, information such as financial records and financial statements

are provided by Management.

The AC has reviewed arrangements by which the staff of the Company may, in confidence, raise

concerns about possible improprieties in matters of financial reporting or other matters, with the

objective of ensuring that arrangements are in place for the independent investigation of such

matters for appropriate follow-up action.

RISK MANAGEMENT

As the Group does not have a risk management committee, the Board, AC, Management assume

the responsibility of the risk management function. Management reviews regularly the Group’s

business and operational activities to identify areas of significant risks as well as appropriate

measures to control and mitigate these risks. Management reviews all significant policies and

procedures and highlight all significant matters to the Board and the AC.

Page 29


With a view to further strengthening its risk management, the Group, with the assistance of the

CRO cum CTO, had implemented 2 manuals at its abalone farms, i.e. the “Farm Safety and Risk

Management Plans for Oceanus Farms” and the “Abalone Breeding Manual”. The Farm Safety and

Risk Management Plans deal extensively with (i) standard operating procedures (“SOP”) for the

Group’s farm safety, in terms of animal health, farm bio-security and farm worker’s health and

safety; and (ii) risk management plans for all of the Group’s farms in China, primarily comprising

the identification of all risks and hazards affecting abalone farms, risk characterization, elements

of risk analysis and risk management processes and protocol for all Oceanus farms. On the other

hand, the Abalone Breeding Manual aims to achieve increase in the survival and growth rate of

the Group’s larvae and juveniles and it documents the entire breeding process which includes the

Group’s proprietary breeding processes and protocols. This evidence-based scientific approach,

coupled with the Group’s many years of hands-on breeding experience, will be implemented for

all future breeding programs of the Group across all of its PRC farms.

Internal Controls

The Board recognizes the importance of maintaining a sound system of internal controls and risk

management to safeguard the interests of the shareholders and the Group’s assets. The Board

has received assurance from the CEO that the financial records have been properly maintained

and financial statements for the financial year under review give a true and fair view of the

Company’s operations and finances, and that an effective risk management and internal control

system has been put in place.

The Company does not have a Chief Financial Officer (“CFO”) for the financial year under review.

The Company, has on 1 August 2016, appointed Ms Tan Pern Yeen as the Group Financial Controller

(“FC”) of the Company. She was resigned on 17 February 2017 and details of her cessation were

released in the announcement dated 16 February 2017.

There was no mention of the assurance received from the FC as required under Guideline 11.3 of

the Code for the financial statements under review as the previous FC was resigned on February

2017.

Ms Tan May Ling was appointed as FC of the Company since 1 February 2017.

The Board, with the concurrence of the AC, is therefore of the opinion that the Group’s system of

internal controls is adequate to address financial, operational and compliance risks of the Group

in its current business environment.

Principle 12: Audit Committee

The Board should establish an Audit Committee with written terms of reference, which clearly set

out its authority and duties.

The AC of the Company currently comprises two (2) Independent Directors, namely Mr Yeo Kan

Yen, Alvin and Mr Kee Poir Mok and one (1) Non-Executive Director, namely Mr Stephen Lee.

Mr Yeo Kan Yen, Alvin is the Chairman of the AC.

Page 30


The principal role and functions of the AC are, as follows:

– commissioning of the external auditors or a suitable accounting firm to conduct a full review

of the internal controls of the Group, which includes reviewing the audit plans of the external

auditors, the results of the external and internal auditors’ examination and their evaluation of

internal accounting controls systems, and the external auditors’ report, letter to management

and the management’s response thereto;

– reviewing the internal control and procedures and ensuring the co-ordination between the

auditors and the management, reviewing the co-operation and assistance given by the

management to the auditors, and discussing problems and concerns, if any, arising from

the interim and final audits and any matters which the auditors may wish to discuss (in the

absence of the management where necessary);

– ensuring that the internal audit function is adequate and that a clear reporting structure

is in place between the AC and the internal auditors, and reviewing the scope and results

of the internal audit procedures including the effectiveness of the internal audit function.

In particular, ensuring that all internal control weaknesses are satisfactorily and properly

rectified and that the SGX-ST is updated on any findings of the external auditors or

accounting firm and any action taken by the AC to rectify such weaknesses pursuant thereto;

– ensuring that a review of the effectiveness of the Company’s material internal controls,

including financial, operational and compliance controls, and risk management, is conducted

at least annually by the internal and/or external auditors;

– reviewing and ensuring the integrity of the financial statements of the Group before

submission to the Board for approval, focusing in particular, on significant financial reporting

issues, changes in accounting policies and practices, major risk areas, significant adjustments

resulting from the audit, the going concern statement, compliance with accounting standards

and compliance with the Listing Manual of the SGX-ST and any other statutory/regulatory

requirements;

– reviewing and discussing with the external auditors, and commissioning and reviewing the

findings of internal investigations into, any suspected fraud or irregularity, or suspected failure

of internal controls, or suspected infringement of any relevant laws, rules or regulations, which

has or is likely to have a material impact on the Group’s operating results and/or financial

position, and the management’s response;

– reviewing the risk profile of the Company, its internal control and risk management procedures

and the appropriate steps to be taken to mitigate and manage risks at acceptable levels

determined by the Board;

– reviewing the scope and results of the audit and its cost effectiveness and the independence

and objectivity of the external auditors, and where the external auditors also supply a

substantial volume of non-audit services to the Company, keeping the nature and extent of

such services under review, seeking to balance the maintenance of objectivity and value for

money;

Page 31


– reviewing the independence of the external auditors annually, and considering for

recommendation to the Board the appointment, remuneration, terms of engagement or

re-appointment of the external and internal auditors and matters relating to the resignation

or dismissal of the auditors;

– reviewing and approving any interested person transactions falling within the scope of

Chapter 9 of the Listing Manual of the SGX-ST;

– reviewing any potential conflicts of interests that may arise in respect of any Director of the

Company for the time being;

– reviewing arrangements by which staff of the Company may, in confidence, raise concerns

about possible impropriety in matters of financial reporting and other matters and the

adequacy of procedures for independent investigation and appropriate follow-up action in

response to such complaints;

– undertaking such other reviews and projects as may be requested by the Board and reporting

to the Board its findings from time to time on matters arising and requiring the attention of

the AC;

– generally undertaking such other functions and duties as may be required by statute or the

Listing Manual of the SGX-ST, or by such amendments made thereto from time to time;

– assessing the performance of the chief financial officer, for the relevant period, on an annual

basis to determine his suitability for the position;

– at quarterly intervals, or any other period that the AC deems fit, ensuring that trade

receivables are stated at fair value, accurately recorded in the financial statements;

– conducting such tests and examinations of financial statements including, but not limited to,

securing independent confirmations of balances from major debtors, checking on frequencies

of payments from major debtors and evaluating the adequacy of credit policies; and

– reviewing and reporting to the Board at least annually the adequacy and effectiveness of

the Company’s internal controls, including financial, operational, compliance and information

technology controls (such review can be carried out internally or with the assistance of any

competent third parties).

The AC has adopted written terms of reference defining its membership, administration and duties.

The AC have sufficient financial and/or management expertise, as interpreted by the Board in its

business judgment, to discharge the AC’s functions.

The AC will meet with the external auditors without the presence of Management at least once

in every financial year.

The AC has explicit authority to investigate any matter within its terms of reference, full access to

and co-operation by the Executive Director and Management to discharge its functions properly.

The AC meets on a quarterly basis to review the quarterly and the audited annual financial

statements and all related documents in relation thereof before submission to the Board for

approval.

Page 32


The AC has ultimate responsibility for the systems of internal control maintained and set in place

by the Company. The systems are intended to provide reasonable assurance, but not an absolute

guarantee, against material financial misstatement of loss, and regarding the safeguarding of

investments and assets, reliability of financial information, compliance with appropriate legislation,

regulations and best practices, and the identification of business risks.

To ensure that internal controls processes are adequate and effective, the AC is assisted by

various independent professional service providers. The reviews performed by Management

and the assistance of the external auditors enabled the AC to carry out assessments of the

effectiveness of key internal controls during the year.

Any material non-compliance or weaknesses in internal controls or recommendations from external

auditors to further improve the internal controls were reported to the AC. The AC will follow up

with Management on the recommendations made by the auditors. Based on the reports submitted

by the external auditors to the AC and the Board, areas of improvements have been identified and

management is in the process of tightening its internal control and risk management processes.

The AC reviews the independence of Foo Koo Tan LLP (“FKT”) annually. FKT did not provide any

non-audit services to the Group.

For the financial year ended 31 December 2016, the aggregate amount of the agreed audit fees

to be paid to FKT is RMB772,000.

The Company confirms that it is in compliance with Rule 712 and Rule 715 of the SGX-ST Listing

Manual in relation to its auditing firms for financial year ended 31 December 2016.

The AC is satisfied with the independence and objectivity of FKT, the external auditor and

recommends to the Board the nomination of the external auditor for re-appointment.

Principle 13: Internal Audit

The company should establish an internal audit function that is adequately resourced and

independent of the activities it audits.

The Board recognizes the importance of maintaining a system of internal controls to safeguard

the shareholders’ investments and the Company’s assets. During the financial year under review,

the internal audit function was performed internally by a team consisting of the Executive Director

and the Country Manager (China Operations). The team performed the internal audit function and

they report primarily to the AC. The internal audit plan is submitted to the AC for approval prior

to the commencement of the internal audit. The AC will review the activities including overseeing

and monitoring of the implementation of improvements required on internal control weaknesses

identified.

The AC is satisfied that the internal audit functions have been adequately carried out.

The AC is satisfied that the internal audit function is staffed by suitably qualified and experienced

professionals with the relevant experience.

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SHAREHOLDERS RIGHTS AND RESPONSIBILITIES

Principle 14: Shareholder Rights

Companies should treat all shareholders fairly and equitably, and should recognise, protect and

facilitate the exercise of shareholders’ rights, and continually review and update such governance

arrangements.

The Company is committed to maintaining and improving its level of corporate transparency of

financial results and other pertinent information. Other than the routine announcements made in

accordance with the requirements of the Listing Manual of the SGX-ST, the Company has issued

additional announcements and press releases to update shareholders on the activities of the

Company and the Group.

The Company does not practice selective disclosure. The Company ensures true and fair

information is delivered adequately to all shareholders and to ensure that shareholders have the

opportunity to participate effectively in and vote at general meetings of shareholders. Financial

results and annual reports are announced or issued within the mandatory period (and where

this is not possible, relevant extensions of time are sought in accordance with applicable laws,

regulations and rules).

Currently, the Constitution of the Company allows a member of the Company to appoint up to two

(2) proxies to attend and vote at general meetings. A shareholder who is a relevant intermediary

(as defined in the Act) may appoint more than two (2) proxies, but each proxy must be appointed

to exercise the rights attached to a different share or shares held by such shareholder.

Principle 15: Communication with Shareholders

Companies should actively engage their shareholders and put in place an investor relations policy

to promote regular, effective and fair communication with shareholders.

The Board is mindful of its obligations to provide timely disclosure of material information to

shareholders of the Company, to understand the views of the shareholders and does so through:

– annual reports issued to all shareholders. Non-shareholders may access the SGX website for

static copies of the Company’s annual reports;

– interim, half and full yearly announcements of its financial statements on the SGXNET;

– other announcements on the SGXNET;

– press releases on major developments regarding the Company; and

– the Company’s website at www.oceanus.com.sg through which shareholders can access

information on the Company.

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Principle 16: Conduct of Shareholder meetings

Companies should encourage greater shareholder participation at general meetings of

shareholders, and allow shareholders the opportunity to communicate their views on various

matters affecting the Company.

The Company is committed to regular and proactive communication with its shareholders in

line with continuous disclosure obligations of the Company under the SGX-ST Listing Manual

and to establishing a corporate governance culture that promotes fair and equitable treatment

of all shareholders. All shareholders are treated fairly and equitably, and enjoy specific rights

under the Act and the Constitution. Pertinent information will be disclosed to shareholders in a

timely, fair and equitable manner. The Company does not practice selective disclosure. Material

developments, press releases, quarterly, half year and full year results, analysts briefing materials

and other changes in the Company or its business which would be likely materially affect the price

or value of the Company are always released through SGXNET pursuant to the rules of the Listing

Manual of the SGX. When analysts briefings are held to discuss on major events and financial

results, Management will only meet the analysts after the announcement is released on SGXNET.

Pertinent information is communicated to shareholders through:

1. interim, half and full yearly results announcements which are published on the SGXNET and

in press releases;

2. the Company’s annual reports that are prepared and issued to all shareholders;

3. notices of and explanatory memoranda, for AGM’s and extraordinary general meetings; and

4. press releases on major developments of the Company.

All shareholders of the Company are encouraged to participate at general meetings. Information

on shareholders’ meeting disseminated through notices published in newspapers, as well as

through reports or circulars sent to all shareholders, to allow shareholders to be informed of the

rules, including voting procedures that govern general meetings of shareholders. Resolutions

at general meetings are on each substantially separate issue. All the resolutions at the general

meetings are single item resolutions.

AGMs are the main forum for dialogue with shareholders and allow the Board and Management to

address shareholder questions and concerns. These meetings provide a forum for Management

to explain the Group’s strategy and financial performance. Management also uses meetings with

investors and analysts to solicit their perceptions of the Group. Annual reports and notices of the

AGMs are sent to all shareholders. The members of the AC, the NC and the RC will be present at

AGMs to answer questions relating to the work of these committees. The external auditors will also

be present to assist the Directors in addressing any relevant queries by shareholders. The Board

welcomes the views of shareholders on matters affecting the Company, whether at shareholders’

meetings or on an ad-hoc basis.

Page 35


To promote greater transparency and effective participation, the Company has conducted the

voting of its resolutions by poll at all the general meetings and make announcement on the SGXNet

of the detailed results showing the number of votes cast for and against each resolution and the

respective percentages after the conclusion of the general meetings.

DEALINGS IN SECURITIES

The Group has adopted and implemented policies in line with the SGX-ST’s best practices in

relation to the dealing of shares of the Company. The policies have been made known to directors,

executive officers and any other persons as determined by Management who may possess

unpublished material price-sensitive information of the Group.

The Group has advised Directors and all key executives not to deal in the Company’s shares

during the period commencing one month prior to the announcement of the Company’s interim,

half-yearly and full-year results and ending on the date of the announcement of the results.

The Group has reminded its Directors and officers that it is an offence under the Securities and

Futures Act, Chapter 289, for a listed issuer or its officers to deal in the listed issuer’s securities as

well as securities of other listed issuers when the officers are in possession of unpublished material

price-sensitive information in relation to those securities. Directors and executives are expected

and reminded to observe insider-trading laws at all times even when dealing in securities within

permitted trading periods. The Group has further reminded its Directors and officers not to deal

in the Company’s securities on short-term considerations.

INTERESTED PERSON TRANSACTIONS

The Group has adopted an internal policy in respect of any transactions with interested persons

and established procedures for the review and approval of such transactions.

All interested person transactions will be properly documented and submitted to the AC for

quarterly review to ensure that they are carried out on an arm’s length basis, on normal

commercial terms and will not be prejudicial to the interests of the shareholders.

There are no interested person transactions during the year under review. The Company has

not adopted any interested person transaction mandate which requires approvals from its

shareholders.

MATERIAL CONTRACTS

There are no material contracts of the Company and its subsidiaries involving the interests of the

CEO, each Director or controlling shareholder, either still subsisting at the end of the financial

year ended 31 December 2016 or entered into since the end of the previous financial year ended

31 December 2015.

Page 36


LOAN PROCEEDS AND RESTRUCTURING

During the financial year 2015, the Company has obtained from its shareholders their approval

in respect of the Proposed Restructuring (as defined in the Company’s circular to shareholders

dated 6 May 2015, the “Circular”). Under the Proposed Restructuring, the Company has secured

cash injections of an aggregate amount of S$32,500,000, comprising (i) S$30,000,000 from the

OKGL Loan (as defined in the Circular); and (ii) S$2,500,000 from the Financing Shareholders

Loans (as defined in the Circular) (collectively, the “Proceeds”).

The Company has to date received a total of S$9,200,000 as opposed to the full S$30,000,000

cash injection pursuant the OKGL Loan. These proceeds, together with the OWIL Loan and BWIL

(as defined in the Circular), are undergoing a debt restructuring exercise as set out in a binding

term sheet entered into between the Company, OKGL, OWIL and BWIL on 8 September 2016.

Page

Directors’ Statement 38

Independent Auditor’s Report 42

Statements of Financial Position 47

Consolidated Income Statement 48

Consolidated Statement of Comprehensive Income 49

Consolidated Statement of Changes in Equity 50

Consolidated Statement of Cash Flows 5 1

Notes to the Financial Statements 53

Statistics of Shareholdings 113

Notice of Annual General Meeting 116

Proxy Form

Page 37

Financial Contents

The directors submit this annual report to the members together with the audited consolidated

financial statements of the Group and statement of financial position of the Company for the

financial year ended 31 December 2016.

Opinion of the directors

In the opinion of the directors,

(a) the accompanying financial statements of the Group and the Company are drawn up so as

to give a true and fair view of the financial position of the Group and of the Company as

at 31 December 2016 and of the financial performance, changes in equity and cash flows of

the Group for the financial year ended on that date in accordance with the provisions of the

Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and

(b) at the date of this statement, except as disclosed in Note 2(a) to the financial statements,

there are reasonable grounds to believe that the Company will be able to pay its debts as

and when they fall due.

The Board of Directors has, on the date of this statement, authorised these financial statements

for issue.

Names of directors

The directors of the Company in office at the date of this report are:

Peter Koh Heng Kang

Yeo Kan Yen, Alvin

Kee Poir Mok

Stephen Lee


Wong Ann Chai

Arrangements to enable directors to acquire shares or debentures

Except as disclosed under the “Share options” section of this report, neither at the end of, nor at

any time during the financial year, was the Company a party to any arrangement whose objects

are, or one of whose objects is, to enable the directors of the Company to acquire benefits by

means of the acquisition of shares in or debentures of the Company or any other body corporate.

Page 38

Directors’ StatementFor the financial year ended 31 December 2016

Directors’ interest in shares or debentures

According to the register kept by the Company for the purposes of Section 164 of the Companies

Act, Cap. 50, particulars of interests of directors who held office at the end of the financial year

(including those of their spouses and children below 18 years of age) in shares, debentures,

warrants and share options in the Company and in related corporations (other than wholly-owned

subsidiaries) are as follows:

Holdings registered

in the name of director

Holdings in which

director is deemed

to have an interest

As at As at As at As at

1.1.2016 31.12.2016 1.1.2016 31.12.2016

The Company –

Oceanus Group Limited Number of ordinary shares

Kee Poir Mok 175,234,975 175,234,975 – –

Share options

During the financial year ended 31 December 2015, the Company

– issued 707,692,308 warrants to the third party lender with each warrant exercisable into

one share at the exercise price of S$0.013 per warrant;

– issued 47,237,779 warrants to the financing shareholders with each warrant exercisable into

one share at the exercise price of S$0.013 per warrant; and

– cancelled existing 1,018,565,587 warrants under Convertible Loan 2012 and issued 2,971,069,187

warrants under the refinanced Convertible Loan 2015 to the existing warrant holders, with

each warrant exercisable into one share at the exercise price of S$0.02167 per warrant.

As at 31 December 2016 and 2015, the number of unexercised warrants is 3,725,999,274 comprising

754,930,087 warrants with an exercise price of S$0.013 per warrant and 2,971,069,187 warrants

with an exercise price of S$0.02167 per warrant.

No options to take up unissued shares of the Company or its subsidiaries have been granted

during the financial year.

No shares were issued during the financial year by virtue of the exercise of the options to take

up unissued shares of the Company or its subsidiaries.

There were no unissued shares of the Company or its subsidiaries under option at the end of the

financial year.

Page 39


Audit Committee

The Audit Committee at the end of the financial year comprises the following members:

Yeo Kan Yen, Alvin (Chairman)

Stephen Lee

Kee Poir Mok

The Audit Committee performs the functions set out in Section 201B(5) of the Companies Act,

Cap. 50, the SGX Listing Manual and the Code of Corporate Governance. In performing those

functions, the Audit Committee reviewed the following:

(i) overall scope of both the internal and external audits and the assistance given by the

Company’s officers to the auditors. It met with the Company’s internal and external auditors

to discuss the results of their respective examinations and their evaluation of the Company’s

system of internal accounting controls;

(ii) the audit plan of the Company’s independent auditor and any recommendations on internal

accounting controls arising from the statutory audit;

(iii) quarterly, half-yearly and annual announcements, the statement of financial position of the

Company and the consolidated financial statements of the Group for the financial year ended

31 December 2016 as well as the auditor’s report thereon;

(iv) effectiveness of the Company’s material internal controls, including financial, operational

and compliance controls and information technology controls and risk management systems

via reviews carried out by the internal auditors;

(v) met with the external auditor, other committees, and management in separate executive

sessions to discuss any matters that these groups believe should be discussed privately with

the Audit Committee;

(vi) reviewed legal and regulatory matters that may have a material impact on the financial

statements, related compliance policies and programmes and any reports received from

regulators;

(vii) reviewed the cost effectiveness and the independence and objectivity of the external auditor;

(viii) reviewed the nature and extent of non-audit services provided by the external auditor;

(ix) recommended to the board of directors the external auditor to be nominated, approved the

compensation of the external auditor, and reviewed the scope and results of the audit;

(x) reported actions and minutes of the Audit Committee to the board of directors with such

recommendations as the Audit Committee considered appropriate; and

(xi) interested person transactions (as defined in Chapter 9 of the Listing Manual of the

Singapore Exchange).

Page 40


Audit Committee (Cont’d)

The Audit Committee has full access to management and is given the resources required for it to

discharge its functions. It has full authority and the discretion to invite any director or executive

officer to attend its meetings. The Audit Committee also recommends the appointment of the

external auditor and reviews the level of audit and non-audit fees.

The Audit Committee is satisfied with the independence and objectivity of the external auditor

and has recommended to the Board of Directors that the auditor, Foo Kon Tan LLP, be nominated

for re-appointment as auditor at the forthcoming Annual General Meeting of the Company.

Full details regarding the Audit Committee are provided in the Report on Corporate Governance.

In appointing our auditors for the Company and subsidiaries, we have complied with Rules 712

and 715 of the SGX Listing Manual.

Independent auditor

The independent auditor, Foo Kon Tan LLP, Chartered Accountants, has expressed its willingness

to accept re-appointment.

On behalf of the Directors

PETER KOH HENG KANG

YEO KAN YEN, ALVIN

Dated: 4 December 2017

Page 41


Report on the financial statements

We were engaged to audit the accompanying financial statements of Oceanus Group Limited (the

“Company”) and its subsidiaries (the “Group”), which comprise the statements of financial position

of the Group and the Company as at 31 December 2016, the consolidated income statement, the

consolidated statement of comprehensive income, consolidated statement of changes in equity

and consolidated statement of cash flows of the Group for the year then ended, and a summary

of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

Management is responsible for the preparation of financial statements that give a true and fair

view in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and

Singapore Financial Reporting Standards, and for devising and maintaining a system of internal

accounting controls sufficient to provide a reasonable assurance that assets are safeguarded

against loss from unauthorised use or disposition; and transactions are properly authorised and

that they are recorded as necessary to permit the preparation of true and fair financial statements

and to maintain accountability of assets.

Auditor’s responsibilities

Our responsibility is to express an opinion on these financial statements based on conducting our

audit in accordance with Singapore Standards on Auditing. Because of the matters described in

the Basis for Disclaimer of Opinion paragraphs, we were not able to obtain sufficient appropriate

audit evidence to provide a basis for an audit opinion.

Basis for Disclaimer of Opinion

(1) Going concern

As discussed in Note 2(a) to the financial statements, as at 31 December 2016, the Group

and the Company had net current liabilities of RMB599,679,000 and RMB524,891,000

(2015 – RMB557,417,000 and RMB489,803,000), and had a deficit in shareholders’ funds

of RMB490,798,000 and RMB419,103,000 (2015 – RMB397,763,000 and RMB358,330,000)

respectively. The Group incurred a loss after tax of RMB62,236,000 and a total comprehensive

loss of RMB93,035,000. The Group had convertible loans of RMB352,896,000 of which

RMB308,774,000 was due on 31 December 2016. As at 31 December 2016, interest on

convertible loans in arrear was RMB49,189,000 (2015 – RMB28,445,000). These factors

indicate the existence of a material uncertainty which may cast a significant doubt on the

Group’s and Company’s ability to continue as a going concern.

The matters set out above and in Note 2(a) to the financial statements indicate the existence

of a material uncertainty which cast a significant doubt on the Group’s and the Company’s

ability to continue as a going concern. The going concern assumption under which the

financial statements are prepared is dependent on the successful conclusion of the debt

restructuring exercise as disclosed in Note 33 to the financial statements, disposal of assets

that are not related to its current operations and positive cash flow from its operations in

future.

Page 42

Independent Auditor’s ReportTo the members of Oceanus Group Limited

The financial statements of the Group and the Company do not include any adjustments

relating to the realisation and classification of asset amounts that may be necessary if

the Group and the Company are unable to continue as a going concern. Should the going

concern assumption be inappropriate, adjustments would have to be made to reflect the

situation that assets may need to be realised other than in the amounts at which they are

currently recorded in the consolidated statements of financial position. In addition, the

Group and the Company may have to provide for further liabilities that may arise and

to reclassify non-current assets and non-current liabilities as current assets and current

liabilities respectively. No adjustments have been made in the financial statements of the

Group and the Company in respect of these. The ability of the Group and the Company to

continue as going concerns depends on the successful outcome of the matters set out above

which cannot be determined at present. Therefore, we are not able to form an opinion as to

whether the going concern basis of presentation of the accompanying financial statements

of the Group and the Company is appropriate.

(2) Biological assets

As at 31 December 2016, the carrying amount of the biological assets was RMB6,404,000

(2015 – RMB2,418,000).

Management did not conduct a physical count of the biological assets as at 31 December

2016 and 31 December 2015. Hence, we were unable to satisfy ourselves by alternative means

concerning the existence, quantity and the accuracy of the costs of the biological assets

held at 31 December 2016 and 31 December 2015.

(3) Recoverable amount of property, plant and equipment and prepaid leases and impairment

losses

As described in Note 4 and Note 5 of the consolidated financial statements, the Group had

carried out an impairment assessment over its property, plant and equipment and prepaid

leases.

The recoverable amount was based on the cash-generating unit’s fair value less costs to

sell, as determined by an independent professional valuer based on the market approach

and cost approach, which was higher than value-in-use.

As described in Note 4, management had not recognised a reversal of impairment loss

on property, plant and equipment and prepaid leases amounting to RMB28,843,000 and

RMB137,000, respectively, for the year ended 31 December 2016. This is not in compliance

with FRS 36 Impairment of Assets.

As at 31 December 2016, the carrying amount of the Group’s buildings and farm structures

constructed on land leased from third parties (“Collectively-owned Land”) and the related

prepaid leases amounted to RMB121,193,000 and RMB1,214,000 (2015 – RMB154,679,000 and

RMB1,352,000), respectively.

Page 43


In assessing the fair value of these buildings and farm structures and the related prepaid

leases, the valuer had made certain key assumptions as follows:

(1) the Collectively-owned Land is freely transferable to any third party in the open market;

(2) consent for the land transfer will be granted by the individual owners of the land; and

(3) recoverable amount of property, plant and equipment and prepaid leases and

impairment losses.

It was assumed that the relevant regulatory documents required for the land transfer

had been obtained. As at 31 December 2016 and 31 December 2015, no separate transfer

agreements had been entered into with the individual owners of the land to transfer the

ownership to the Group.

In the absence of legally binding contractual arrangements and the resultant uncertainty over

transferability of Collectively-owned Land in the key assumptions used in the determination

of impairment loss, we were unable to satisfy ourselves by alternative means concerning the

impairment loss amounts calculated for the year ended 31 December 2016 and 31 December

2015, and carrying amount of these assets as at 31 December 2016 and 31 December 2015.

(4) Trade and other payables and supporting documents

As at 31 December 2016, trade and other payables included amounts of RMB8 million

(2015 – RMB8 million) related to purchases of raw materials and consumable, capital

expenditure and operating expenses brought forward from prior years.

We were not able to carry out auditing procedures on these trade and other payables as at

31 December 2016 and 31 December 2015 because documentation supporting the transactions

were not available. We were unable to satisfy ourselves by alternative means concerning

the validity, completeness and accuracy of these trade and other payables of RMB8 million

(2015 – RMB8 million) in aggregate as at 31 December 2016 and 31 December 2015.

(5) Convertible loans

The Group refinanced Convertible Loan 2012 with Convertible Loan 2015 during the year

ended 31 December 2015 (Note 18).

Management did not estimate the fair value of Convertible Loan 2015 to assess gain or loss

on de-recognition of Convertible Loans 2012, and the allocation of the carrying amount of

Convertible Loan 2015 to the liability and equity components upon initial recognition. Interest

was accrued based on the notional interest rate, instead of effective interest rate, for the

year ended 31 December 2016 and 31 December 2015.

We were unable to satisfy ourselves by alternative means concerning the classification of

Convertible Loan 2015 into the liability and equity components and its carrying amount as at

31 December 2016 and 31 December 2015, and the related interest expense based on effective

interest rate for the years ended 31 December 2016 and 31 December 2015.

Page 44


(6) Loans

As described in Note 15 to the financial statements, warrants were issued to the financing

shareholders and a third party lender during the year ended 31 December 2015. Management

did not assess the allocation of the carrying amount of loans from shareholders and a third

party to the liability and equity components in connection with the warrants.

Consequently, as at 31 December 2016, loans from shareholders and loans from third parties

amounting to RMB1,894,000 and RMB14,071,000 (2015 – RMB1,811,000 and RMB4,093,000),

respectively, were measured based on the original loan principals plus accrued interest

which had been computed based on the original loan principals and notional interest rates,

instead of the effective interest rate in accordance with FRS39 Financial Instruments.

As described in Note 31.6, management had assumed the total carrying value of loans from

shareholders and loans from third parties as at 31 December 2016 amounting to RMB1,894,000

and RMB14,071,000 (2015 – RMB1,811,000 and RMB4,093,000), respectively, approximated the

fair value without carrying out an assessment using an appropriate valuation technique and

inputs thereto. This constituted a departure from FRS107 Financial Instruments Disclosure.

We were unable to satisfy ourselves by alternative means concerning the classification

of these loans into the liability and equity components and their carrying amount as at

31 December 2016 and 31 December 2015, interest on these loans to be computed based

on the effective interest rate for the years ended 31 December 2016 and 31 December 2015

and the related accrued interest as at 31 December 2016 and 31 December 2015, and the

fair value of these loans to be disclosed in the financial statements as at 31 December 2016

and 31 December 2015.

(7) Other payables

As at 31 December 2016, other payables included an amount of RMB1,000,000 payable to

the Group’s Executive Director (Note 17).

This liability amount arose from the Group Executive Director’s payment on behalf of a

subsidiary to a third party to restore safety and resume control at a farm seized by that

subsidiary’s contract security and protection services provider.

We were not able to carry out auditing procedures on this liability amount as at 31 December

2016 because documentation supporting the transaction were not available. We were unable

to satisfy ourselves by alternative means concerning the validity and accuracy of this liability

amount as at 31 December 2016 and the occurrence and accuracy of the related expense

for the year ended 31 December 2016.

Disclaimer of opinion

Because of the significance of the matters described in the basis for disclaimer of opinion section

above, we have not been able to obtain sufficient appropriate audit evidence to provide a basis

for an audit opinion. Accordingly, we do not express an opinion on the financial statements.

Page 45


Other Matter

Independent auditor’s report for the financial year ended 31 December 2015

The independent auditor’s report dated 3 May 2017 on the financial statements for the financial

year ended 31 December 2015 of which we were auditors expressed a disclaimer of audit opinion.

The matters included in the auditor’s report have a consequential material impact on the opening

balances in the Basis for Disclaimer of Opinion paragraph stated above.

Placement on the Watch-List

On 2 March 2016, the Company announced that the Singapore Exchange Securities Trading

Limited (the “SGX-ST”) has notified the Company that pursuant to Rule 1311(1), it will be placed

on the Watch-List with effect from 3 March 2016 due to the financial entry criteria. The Company

must take active steps to meet the requirements of Listing Rule 1314(1) of the Listing Manual

of the SGX-ST (the “Listing Manual”) for its removal from Watch-List within 36 months from

3 March 2016, failing which the SGX-ST may either remove the Company from the official list of

the SGX-ST (the “Official List”) or suspend trading of the Company with a view to remove the

Company from the Official List.

Report on other legal and regulatory requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company

and its subsidiaries incorporated in Singapore of which we are the auditors have been properly

kept in accordance with the provisions of the Act.

Foo Kon Tan LLP

Public Accountants and

Chartered Accountants

Singapore, 4 December 2017

Page 46


The annexed notes form an integral part of and should be read in conjunction with these financial statements.

Page 47

Statements of Financial PositionAs at 31 December 2016

The Group The Company

31 December 31 December 31 December 31 December

2016 2015 2016 2015

Note RMB’000 RMB’000 RMB’000 RMB’000

ASSETS

Non-Current Assets

Property, plant and

equipment 4 154,645 197,657 – –

Prepaid leases 5 6,007 6,007 – –

Investments in subsidiaries 6 – – 157,559 175,483

160,652 203,664 157,559 175,483

Current Assets

Inventories 7 180 110 – –

Trade receivables 8 11 74 – –

Other receivables 9 5,025 4,685 13,846 3,129

Biological assets 10 6,404 2,418 – –

Cash and bank balances 11 9,545 2,209 3,170 151

21,165 9,496 17,016 3,280

Total assets 181,817 213,160 174,575 178,763

EQUITY AND LIABILITIES

Capital and Reserves

Share capital 12 2,413,255 2,413,255 2,413,255 2,413,255

Reserves 13 (2,904,053) (2,811,018) (2,832,358) (2,771,585)

Equity attributable to

owners of the Company (490,798) (397,763) (419,103) (358,330)

Total equity (490,798) (397,763) (419,103) (358,330)

Non-Current Liabilities

Deferred tax liabilities 14 – – – –

Loans and borrowings 15 7,649 1,811 7,649 1,811

Convertible loans 18 44,122 42,199 44,122 42,199

51,771 44,010 51,771 44,010

Current Liabilities

Trade payables 16 10,676 10,662 – –

Other payables 17 121,581 91,781 77,268 52,561

Loans and borrowings 15 8,316 4,093 8,316 4,093

Convertible loans 18 308,774 295,312 308,774 295,312

Derivative liability 19 147,549 141,117 147,549 141,117

Current tax payable 23,948 23,948 – –

620,844 566,913 541,907 493,083

Total liabilities 672,615 610,923 593,678 537,093

Total equity and liabilities 181,817 213,160 174,575 178,763

Page 48

Consolidated Income StatementFor the financial year ended 31 December 2016


Year ended Year ended

31 December

2016

31 December

2015

Continuing operations Note RMB’000 RMB’000

Revenue 3 10,375 4,844

Cost of inventories (5,932) (3,759)

Gain arising from changes in fair value less costs to

sell biological assets 10 9,554 5,155

Other operating income 20 8,481 20,830

Feed used (4,563) (2,017)

Electricity, fuel and water (873) (2,054)

Staff costs 23 (7,602) (11,776)

Amortisation of prepaid leases 5 (230) (415)

Impairment loss on prepaid leases 5 (83) (1,492)

Impairment loss on property, plant and equipment 4 (9,142) (44,335)

Depreciation of property, plant and equipment 4 (34,749) (18,530)

Other operating expenses 21 (9,362) (14,054)

Finance costs 22 (17,791) (34,949)

Loss before taxation 23 (61,917) (102,552)

Income tax credit 24 – 1,890

Loss for the year from continuing operations (61,917) (100,662)

Discontinued operations

(Loss)/profit for the year from discontinued operations 29 (319) 3,422

Loss for the year (62,236) (97,240)

Loss attributable to:

Owners of the Company (62,236) (97,240)

(62,236) (97,240)

Loss per share

From continuing and discontinued operations

Basic and diluted (fen) 26 (1.36) (2.51)

From continuing operations

Basic and diluted (fen) 26 (1.36) (2.60)

Page 49

Consolidated Statement of Comprehensive IncomeFor the financial year ended 31 December 2016


31 December

2016

31 December

2015

Note RMB’000 RMB’000

Loss for the year (62,236) (97,240)

Other comprehensive loss after tax

Items that will be reclassified subsequently to

profit or loss

Exchange differences on translation of

foreign operations at nil tax 25 (30,799) (19,386)

Total comprehensive loss for the year, net of tax (93,035) (116,626)

Total comprehensive loss attributable to:

Owners of the Company (93,035) (116,626)

(93,035) (116,626)


Page 50

Consolidated Statement of Changes in EquityFor the financial year ended 31 December 2016

Share

capital

Capital

reserve

Warrant

reserve

Currency

translation

reserve

Statutory

reserve

Accumulated

losses

Total

equity

The Group RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2016 2,413,255 (1,137,504) 101,651 29,805 39,262 (1,844,232) (397,763)

Total comprehensive loss

for the year

Loss for the year – – – – – (62,236) (62,236)

Other comprehensive loss

Exchange differences arising

from translation – – – (30,799) – – (30,799)


for the year – – – (30,799) – (62,236) (93,035)

Translations with owners,

recognised directly in equity:

Issuance of shares – – – – – – –

Total translations with owners,

recognised directly in equity – – – – – – –

At 31 December 2016 2,413,255 (1,137,504) 101,651 (994) 39,262 (1,906,468) (490,798)

At 1 January 2015 2,373,685 (1,137,504) 101,651 49,191 39,262 (1,746,992) (320,707)


for the year

Loss for the year – – – – – (97,240) (97,240)

Other comprehensive loss

Exchange differences arising

from translation – – – (19,386) – – (19,386)


for the year – – – (19,386) – (97,240) (116,626)

Translations with owners,

recognised directly in equity:

Issuance of shares (Note 12) 39,570 – – – – – 39,570

Total translations with owners,

recognised directly in equity 39,570 – – – – – 39,570

At 31 December 2015 2,413,255 (1,137,504) 101,651 29,805 39,262 (1,844,232) (397,763)


Page 51

Consolidated Statement of Cash FlowsFor the financial year ended 31 December 2016


31 December

2016

31 December

2015


Cash Flows from Operating Activities

Loss before taxation

Continuing operations (61,917) (102,552)

Discontinued operations (319) 3,422

(62,236) (99,130)

Adjustments for:

Gain arising from changes in fair value

less costs to sell of biological assets 10 (9,554) (5,155)

Depreciation of property, plant and equipment 4 34,749 18,530

Loss/(gain) on disposal of property, plant and

equipment and prepaid leases 20, 21 4 (284)

Impairment loss on property, plant and equipment 4 9,142 44,335

Amortisation of prepaid leases 5 230 415

Impairment loss on prepaid leases 5 83 1,492

Unrealised foreign exchange gain (6,604) (18,181)

Interest income 20 (1) (1)

Interest expense 22 17,696 34,949

Operating loss before working capital changes (16,491) (23,030)

Change in inventories (70) (108)

Change in trade receivables 63 (74)

Change in other receivables and deposits (149) (35)

Change in biological assets 5,932 2,778

Change in trade payables 14 (4,514)

Change in other payables 9,091 4,333

Cash used in operations (1,610) (20,650)

Interest received 1 1

Interest paid – (46)

Income tax paid – –

Net cash used in operating activities (1,609) (20,695)

Cash Flows from Investing Activities

Acquisition of property, plant and equipment (890) (113)

Proceeds from disposal of property, plant and

equipment and prepaid leases 7 1,670

Net cash (used in)/generated from investing activities (883) 1,557


Page 52

Consolidated Statement of Cash FlowsFor the financial year ended 31 December 2016


31 December

2016

31 December

2015


Cash Flows from Financing Activities

Proceeds from borrowings 9,789 17,386

Net cash generated from financing activities 9,789 17,386

Net increase (decrease) in cash and cash equivalents 7,297 (1,752)

Effect of cash and cash equivalent denominated in

foreign currencies 39 (4)

Cash and cash equivalents at beginning of year 2,209 3,965

Cash and cash equivalents at end of year 11 9,545 2,209

Significant non-cash transactions:

On 29 September 2015, the Company issued 218,276,492 shares at S$0.00864 per share to the

financing shareholders (Note 12) of which 140,355,396 shares were for partial settlement of the

outstanding loans; and 710,634,793 shares, comprising 201,322,979 shares at S$0.013 per share

and 509,311,814 shares at S$0.00864 per share, as partial settlement of the accrued interest on

the convertible bonds.

Page 53

Notes to the Financial StatementsFor the financial year ended 31 December 2016

1 General information

The financial statements of the Company and of the Group for the year ended 31 December

2016 were authorised for issue in accordance with a resolution of the directors on the date

of the Directors’ Statement.

The Company was incorporated as a limited liability company and domiciled in Singapore.

The registered office is located at 31 Harrison Road #11-03/04 Food Empire Building,

Singapore 369649.

The principal activity of the Company is that of investment holding. The principal activities

of the subsidiaries are stated in Note 6.

2(a) Basis of preparation

The financial statements are prepared in accordance with Singapore Financial Reporting

Standards (“FRS”) including related Interpretations promulgated by the Accounting Standards

Council. The financial statements have been prepared under the historical cost convention,

except as disclosed in the accounting policies below.

The financial statements are presented in Renminbi (“RMB”). All financial information is

presented in RMB thousands (“RMB’000”), unless otherwise stated.

The accounting policies set out below have been applied consistently to all periods presented

in these financial statements, and have been applied consistently by Group entities.

Going concern

As at 31 December 2016, the Group and the Company had net current liabilities of

RMB599,679,000 and RMB524,891,000 (2015 – RMB557,417,000 and RMB489,803,000),

and had a deficit in shareholders’ funds of RMB490,798,000 and RMB419,103,000 (2015 –

RMB397,763,000 and RMB358,330,000) respectively. The Group incurred a loss after tax of

RMB62,236,000 (2015 – RMB97,240,000) and a total comprehensive loss of RMB93,035,000

(2015 – RMB116,626,000). The Group had convertible loans (Note 18) of RMB352,896,000

(2015 – RMB337,511,000) of which RMB308,774,000 was due on 31 December 2016. As at

31 December 2016, interest on convertible loans in arrear was RMB49,189,000 (2015 –

RMB28,445,000). These factors indicate the existence of a material uncertainty which may

cast a significant doubt on the Group’s and Company’s ability to continue as a going concern.

The financial statements have been prepared on a going concern basis, where the Group

has entered into the binding term sheet with their key secured creditors to convert 75.4%

of their outstanding debts to equity, and the balance SGD20 million debt will be paid from

net proceeds from the sale of their PRC land farm to the local authorities. The viability of

the Group and the Company’s operations to continue as a going concern for the next twelve

months after the end of the reporting period is dependent on the completion of the above

management’s plan, disposal of assets that are not related to its current operations and

positive cash flow from its operations in future.

Page 54


2(a) Basis of preparation (Cont’d)

Going concern (Cont’d)

The financial statements do not include any adjustments relating to the recoverability and

classification of recorded asset amounts or to the amounts and classification of liabilities

that may be necessary if the Group and the Company are unable to continue in operation

in the foreseeable future.

If for any reason the Group and the Company are unable to continue in operational existence

for the foreseeable future, the Group and the Company may be unable to discharge their

liabilities in the normal course of business and adjustments may have to be made to reflect

the situation that assets may need to be realised other than in the normal course of business

and at amounts which could differ significantly from the amounts at which they are currently

recorded in the balance sheets. In addition, the Group and the Company may have to provide

for further liabilities which may arise and to reclassify non-current assets and liabilities

as current assets and liabilities respectively. No such adjustments have been made to the

financial statements of the Group and the Company in respect of these.

Significant accounting estimates, assumptions and judgements

The preparation of the financial statements in conformity with FRS requires the use of

judgements, estimates and assumptions that affect the reported amounts of assets and

liabilities and disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the financial year.

Although these estimates are based on management’s best knowledge of current events and

actions, actual results may differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period in which the estimate is revised and in

any future periods affected.

Determination of functional currency

The Group measures foreign currency transactions in the respective functional currencies

of the Company and its subsidiaries. In determining the functional currencies of the

respective entities in the Group, judgement is required to determine the currency that mainly

influences sales prices of goods and services and of the country whose competitive forces

and regulations mainly determines the sales prices of its goods and services. The functional

currencies of the entities in the Group are determined based on the local management’s

assessment of the economic environment in which the entities operate and the respective

entities’ process of determining sales prices.

Page 55



Significant accounting estimates, assumptions and judgements (Cont’d)

Classification of prepaid leases for land use rights (Note 5)

Within the People’s Republic of China, it is the practice for the State to issue land use rights

to individuals or entities. Such rights are evidenced through the granting of a land use rights

certificate, which gives the holder the right to use the land (including the construction of

buildings thereon) for a given length of time. An upfront payment is made for this right.

Management exercises its judgement that the substance of these arrangements is an

operating lease over the land, and that the upfront payment represents prepaid lease rentals.

As such a prepayment is recognised in the consolidated statement of financial position,

analysed between current and non-current assets which represent amounts to be utilised

within and after 12 months of the end of each reporting period respectively. The prepayment

is amortised to spread the lease cost over the duration of the term of the land use rights,

as specified in the land use rights certificate.

Income taxes

The Group has exposure to income taxes in the PRC. Significant judgement is involved in

determining the group-wide provision for income taxes. There are certain transactions and

computations for which the ultimate tax determination is uncertain during the ordinary

course of business. The Group recognises liabilities for expected tax issues based on

estimates of whether additional taxes will be due. Where the final tax outcome of these

matters is different from the amounts that were initially recognised, such differences will

impact the income tax and deferred tax provisions in the year in which such determination

is made. The current tax payable of the Group at the reporting date amounted to

RMB23,948,000 (2015 – RMB23,948,000).

As at 31 December 2016, the Group did not recognise deferred tax assets in relation to

unutilised tax losses amounting to RMB548,326,000 (2015 – RMB1,159,390) due to uncertainty

over which future taxable profit will be available against which the Group can utilise such

benefit.

Critical accounting estimates and assumptions used in applying accounting policies

Biological assets (Note 10)

The value of biological assets were measured based on the market approach and cost

approach for abalones with different sizes, depending on the availability of market prices

and the commencement of revenue-generating process.

The fair value of juvenile abalones measured more than 1cm was assessed based on the

market approach which considers the most relevant forward prices for similar assets at the

balance sheet date.

Page 56




Critical accounting estimates and assumptions used in applying accounting policies (Cont’d)

Biological assets (Note 10) (Cont’d)

The fair value calculation also includes estimates of production cost and normal cost of sale.

The determination of fair values include use of unobservable inputs. Because of the inherent

valuation uncertainty, those estimated fair values may differ significantly from actual results,

and those differences could be material. The fair value adjustment of biological assets has

no cash impact.

As at 31 December 2016, the carrying amounts of biological assets is RMB6,404,000

(2015 – RMB2,418,000).

Impairment of non-financial assets (Note 4, 5, 6)

Property, plant and equipment and land use rights are reviewed to determine whether

there is any indication that the carrying value of these assets may not be recoverable and

have suffered an impairment loss or indications that an impairment loss recognised in prior

periods may no longer exist or may have decreased as at the end of the reporting period. If

any such indication exists, the assets are tested for impairment. The recoverable amount of

the assets is estimated in order to determine the extent of the impairment loss or reversal

of impairment loss, if any.

The recoverable amount of property, plant and equipment and land use rights was based

on fair value less cost to sell which was higher than value in use. Valuations were performed

by an independent professional valuer to determine the fair value less cost to sell of the

Group’s property, plant and equipment and land use rights. The determination of fair values

include use of unobservable inputs. Because of the inherent valuation uncertainty, those

estimated fair values may differ significantly from actual results, and those differences

could be material.

Details of impairment tests of property, plant and equipment, and land use rights are

disclosed in Note 4.

The carrying amounts of property, plant and equipment, prepaid leases and investments

in subsidiaries are RMB154,645,000 (2015 – RMB197,657,000), RMB6,183,000 (2015 –

RMB6,496,000), and RMB157,559,000 (2015 – RMB175,483,000) respectively.

Page 57




Critical accounting estimates and assumptions used in applying accounting policies (Cont’d)

Useful lives of property, plant and equipment (Note 4)

Property, plant and equipment and prepaid leases are depreciated on a straight-line basis

over their estimated useful lives. Changes in the expected level of usage could impact the

economic useful lives and the residual values of these assets, therefore future depreciation

charges could be revised. The carrying amount of property, plant and equipment of the Group

at the end of the reporting period amounted to RMB154,645,000 (2015 – RMB197,657,000).

If depreciation on the Group’s property, plant and equipment increases/decreases by

5% from management’s estimate, the Group’s loss for the year will increase/decrease by

approximately RMB1,737,000 (2015 – RMB927,000).

Impairment of loans and receivables (Note 8, 9)

Allowances for bad and doubtful debts are based on an assessment of the recoverability of

trade and other receivables. Allowances are applied to trade and other receivables where

events or changes in circumstances indicate that the balances may not be collectible. The

identification of bad and doubtful debts requires the use of judgement and estimates. Where

the expected outcome is different from the original estimate, such difference will impact

carrying value of trade and other receivables and doubtful debt expenses in the period in

which such estimate has been changed.

The carrying amount of trade and other receivables (Note 31) of the Group at the reporting

date amounted to RMB4,824,000 (2015 – RMB4,222,000). If the present value of estimated

future cash flows decrease/increase by 5% from management’s estimates, the Group’s loss

will increase/decrease by RMB241,000 (2015 – RMB211,000).

2(b) Interpretation and amendments to published standards

Interpretations and amendments effective in 2016

On 1 January 2016, the Group has applied the new and revised standards, amendments and

interpretation of FRSs that are mandatory for application from that date.

The adoption of the new and revised standards, amendments and interpretations of FRSs

did not result in substantial changes to the Group’s and Company’s accounting policies and

had no material effect on the amounts reported for the current period or prior financial year.

FRS and INT FRS not yet effective

At the date of authorisation of these financial statements, certain new standards, and

amendments to existing standards have been published by ASC that are not yet effective,

and have not been adopted early by the Group. Information on those expected to be relevant

to the Group’s financial statements is provided below.

Page 58


2(b) Interpretation and amendments to published standards (Cont’d)

FRS and INT FRS not yet effective (Cont’d)

The Accounting Standards Council announced on 29 May 2014 that Singapore incorporated

companies listed on the SGX-ST will apply a new financial reporting framework identical

to the International Financial Reporting Standards (“IFRS”) for financial year ending

31 December 2018 onwards. Singapore incorporated companies listed on the SGX-ST will

have to assess the impact of IFRS 1 First-time adoption of IFRS when transitioning to the

new reporting framework. The Group is currently assessing the impact of transitioning to

the new reporting framework on its financial statements.

Management anticipates that all relevant pronouncements will be adopted in the

Group’s accounting policies for the first period beginning after the effective date of the

pronouncement. The directors do not anticipate that the application of these new and

revised FRSs will have a material impact on the financial statements of the Group and the

Company except for the following which may be relevant to the Group and may have a

significant effect on the consolidated financial statements in future financial periods.

Reference Description

Effective date

(Annual periods

beginning

on or after)

Amendments to FRS 7 Statement of Cash Flows 1 January 2017

Amendments to FRS 12 Recognition of Deferred Tax Assets for

Unrecognised losses

1 January 2017

FRS 115 Revenue from Contracts with Customers 1 January 2018

Clarifications to FRS115 Revenue from Contracts with Customers 1 January 2018

FRS 109 Financial Instruments 1 January 2018

Amendments to FRS 40 Transfers of Investment Property 1 January 2018

INT FRS 22 Foreign Currency Transactions and

Advance Consideration

1 January 2018

FRS 116 Leases 1 January 2019

Amendments to FRS 7 Statement of Cash Flows

The amendments to FRS 7 Statement of Cash Flows are part of an initiative that ASC has

undertaken to improve the effectiveness of disclosures in financial reports. Companies would

need to reconcile cash flows arising from financial activities as reported in the statement

of cash flows, excluding contributed equity, to the corresponding liabilities in the opening

and closing statements of financial position. As this is a disclosure standard, it will not have

any impact on the statement of cash flows of the Group when implemented.

Amendments to FRS 12 Recognition of Deferred Tax Assets for Unrealised Losses

The amendments clarify the accounting for deferred tax assets for unrealised losses on debt

instruments measured at fair value.

Page 59




Amendments to FRS 12 Recognition of Deferred Tax Assets for Unrealised Losses (Cont’d)

The amendments are effective for annual periods beginning on or after 1 January 2017, with

early adoption permitted.

The Group is assessing the potential impact on its consolidated financial statements resulting

from the amendments. So far, the Group does not expect any significant impact.

FRS 115 Revenue from Contracts with Customers

FRS 115 Revenue from Contracts with Customers requires the entity to recognise revenue

which depict transfer of promised goods or services to customers in an amount that reflects

the consideration (payment) to which the entity expects to be entitled in exchange for those

goods or services. FRS 115 is effective for annual periods beginning on or after 1 January

2018. Management is currently assessing the impact of FRS 115 and plans to adopt the new

standard on the required effective date.

The amendments clarify how to:

– identify a performance obligation (the promise to transfer a good or a service to a

customer) in a contract.

– determine whether a company is a principal (the provider of a good or service) or an

agent (responsible for arranging for the good or service to be provided).

– determine whether the revenue from granting a licence should be recognised at a

point in time or over time.

The amendments have the same effective date as the Standard, FRS 115, i.e. on 1 January

2018.

FRS 109 Financial Instruments

FRS 109 Financial Instruments replaces FRS 39 and it is a package of improvements

introduced by FRS 109 includes a logical model for:

– classification and measurement,

– a single, forward-looking “expected loss” impairment model and

– a substantially reformed approach to hedge accounting

FRS 109 is effective for annual periods beginning on or after 1 January 2018. The adoption

of FRS 109 will have an impact on the classification and measurement of financial assets,

but no impact on the classification and measurement of financial liabilities. The Group is

currently assessing the impact to the financial statements.

Page 60




Amendments to FRS 40 Transfers of Investment Property

Under the amendments in FRS 40 Transfers of Investment Property has been amended to

state that an entity shall transfer a property to, or from, investment property when, and only

when, there is evidence of a change in use. A change of use occurs if property meets, or

ceases to meet, the definition of investment property. A change in management’s intentions

for the use of a property by itself does not constitute evidence of a change in use.

The amendments are effective on 1 January 2018. However, earlier adoption is permitted.

The amendments would be applied retrospectively in accordance with FRS 8 Accounting

Policies, Changes in Accounting Estimates and Errors.

INT FRS 22 Foreign Currency Transactions and Advance Consideration

This Interpretation provides requirements about which exchange rate to use in reporting

foreign currency transactions (such as revenue transactions) when payment is made or

received in advance.

The Interpretations are effective from 1 January 2018. On initial application, entities would

have the option of applying the Interpretations either retrospectively or prospectively in

accordance with FRS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

FRS 116 Leases

FRS 116 Leases replaces accounting requirements introduced more than 30 years ago in

accordance with FRS 17 Leases that are no longer considered fit for purpose, and is a major

revision of the way in which companies where it is required lessees to recognise most

leases on their balance sheets. Lessor accounting is substantially unchanged from current

accounting in accordance with FRS 17. FRS 116 Leases will be effective for accounting periods

beginning on or after 1 January 2019. Early adoption will be permitted, provided the company

has adopted FRS 115. The Group is currently assessing the impact to the consolidated

financial statements.

2(c) Summary of significant accounting policies

Consolidation

The consolidated financial statements comprise the financial statements of the Company

and its subsidiaries as at the end of the reporting period. The financial statements of the

subsidiaries used in the preparation of the consolidated financial statements are prepared

for the same reporting date as the Company. Consistent accounting policies are applied to

like transactions and events in similar circumstances.

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2(c) Summary of significant accounting policies (Cont’d)

Consolidation (Cont’d)

Consolidation of the subsidiaries in the People’s Republic of China (“PRC”) is based on the

subsidiaries’ financial statements prepared in accordance with FRS. Profits reflected in the

financial statements prepared in accordance with FRS may differ from those reflected in the

PRC statutory financial statements of the subsidiary, prepared for PRC reporting purposes.

In accordance with the relevant laws and regulations, profit available for distribution by the

PRC subsidiaries are based on the amounts stated in the PRC statutory financial statements.

All intra-group balances, income and expenses and unrealised gains and losses resulting

from intragroup transactions and dividends are eliminated in full.

Subsidiaries are consolidated from the date of acquisition, being the date on which the

Group obtains control and continue to be consolidated until the date that such control

ceases.

Losses and other comprehensive income are attributable to the non-controlling interest even

if that results in a deficit balance.

Subsidiary

A subsidiary is an investee that is controlled by the Group. The Group controls an investee

when it is exposed, or has rights, to variable returns from its involvement with the investee

and has the ability to affect those returns through its power over the investee. Thus, the

Group controls an investee if and only if the Group has all of the following:

– power over the investee;

– exposure, or rights or variable returns from its involvement with the investee; and

– the ability to use its power over the investee to affect its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances

indicate that there are changes to one or more of the three elements of control listed above.

When the Group has less than a majority of the voting rights of an investee, it has power

over the investee when the voting rights are sufficient to give it the practical ability to direct

the relevant activities of the investee unilaterally. The Group considers all relevant facts

and circumstances in assessing whether or not the Group’s voting rights in an investee are

sufficient to give it power, including:

– The size of the Group’s holding of the voting rights relative to the size and dispersion

of holdings of other vote holders;

– Potential voting rights held by the Group, other vote holders or other parties;

Page 62




Subsidiary (Cont’d)

– Rights arising from other contractual arrangements; and

– Any additional facts and circumstances that indicate that the Group has, or does not

have, the current ability to direct the relevant authorities at the time that decisions

need to be made, including voting patterns at previous shareholders’ meetings.

In the Company’s separate financial statements, shares in subsidiaries are stated at cost

less allowance for any impairment losses on an individual subsidiary basis.

Non-controlling interest

Non-controlling interest represents the equity in subsidiary not attributable, directly or

indirectly, to owners of the Company, and are presented separately in the consolidated

statement of comprehensive income, and within equity in the consolidated statement of

financial position, separately from equity attributable to owners of the Company.

Changes in ownership interests in subsidiaries without change of control

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group

losing control over the subsidiaries are accounted for as equity transactions. The carrying

amounts of the Group’s interests and non-controlling interests are adjusted to reflect the

changes in their relative interests in the subsidiaries. Any difference between the amount

by which the non-controlling interests are adjusted and the fair value of the consideration

paid or received is recognised directly in equity and attributed to owners of the Group.

Changes in ownership interests in subsidiaries resulting in loss of control

When the Group loses control of a subsidiary, it:

– De-recognises the assets (including goodwill) and liabilities of the subsidiary at their

carrying amounts as at that date when control is lost;

– De-recognises the carrying amount of any non-controlling interest;

– De-recognises the cumulative translation differences recorded in equity;

– Recognises the fair value of the consideration received;

– Recognises the fair value of any investment retained; and

– Recognises any gain or loss in profit or loss.

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Changes in ownership interests in subsidiaries resulting in loss of control (Cont’d)

A gain or loss is recognised in profit or loss and is calculated as the difference between:

(i) the aggregate of the fair value of the consideration received and the fair value of any

retained interest; and

(ii) the previous carrying amounts of the assets and liabilities of the subsidiary and any

non-controlling interest.

All amounts previously recognised in other comprehensive income in relation to that

subsidiary are accounted for as if the Group had directly disposed of the related assets or

liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category

of equity as specified/permitted by applicable FRS).

The fair value of any investment retained in the former subsidiary at the date when the

control is lost is regarded as the fair value on initial recognition for subsequent accounting

under FRS 39 or, when applicable, the cost on initial recognition of an investment in an

associate or a joint venture.

Business combination

The Group applies the acquisition method to account for business combinations. The

consideration transferred for the acquisition of a subsidiary is the fair values of the assets

transferred, the liabilities incurred to the former owners of the acquiree and the equity

interests issued by the Group. The consideration transferred includes the fair value of any

asset or liability resulting from a contingent consideration arrangement. Identifiable assets

acquired and liabilities and contingent liabilities assumed in a business combination are

measured initially at their fair values at the acquisition date. The Group recognises any

non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair

value or at the non-controlling interest’s proportionate share of the recognised amount of

acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition-date carrying value of the

acquirer’s previously-held equity interest in the acquiree is re-measured to fair value at the

acquisition date; any gains or losses arising from such re-measurement are recognised in

profit or loss. Any contingent consideration to be transferred by the Group is recognised at

fair value at the acquisition date. Subsequent changes to the fair value of the contingent

consideration that is deemed to be an asset or liability is recognised in accordance with

FRS 39 either in profit or loss or as a change to other comprehensive income. Contingent

consideration that is classified as equity is not re-measured, and its subsequent settlement

is accounted for within equity.

Page 64




Goodwill

The excess of the consideration transferred, the amount of any non-controlling interest in the

acquire and the acquisition-date fair value of any previous equity interest in the acquiree

over the fair value of the identifiable net assets acquired is recorded as goodwill.

Bargain purchase

If the total consideration transferred, non-controlling interest recognised and previously-held

interest measured is less than the fair value of the net assets of the subsidiary acquired in

the case of a bargain purchase, the difference is recognised directly in profit or loss.

Functional and presentation currencies

Items included in the financial statements of each entity in the Group are measured using

the currency of the primary economic environment in which the entity operates (“functional

currency”). The functional currency of the Company is Singapore Dollars.

The consolidated financial statements of the Group and the statement of financial position

and statement of changes in equity of the Company are presented in Renminbi. The choice

of presentation currency is to better reflect the currency that mainly determines economic

effects of transactions, events and conditions of the Group.

Conversion of foreign currencies

Foreign currency transactions and balances

Transactions in a currency other than the functional currency (“foreign currency”) are

translated into the functional currency using the exchange rates at the date of the

transactions. Currency translation differences from the settlement of such transactions and

from the translation of monetary assets and liabilities denominated in foreign currencies at

the closing rates at the end of reporting period are recognised in the profit or loss, unless

they arise from borrowings in foreign currencies and net investment in foreign operations.

Those currency translation differences are recognised in the currency translation reserve

in the consolidated financial statements and transferred to the profit or loss as part of the

gain or loss on disposal of the foreign operation.

Non-monetary items measured at fair values in foreign currencies are translated using the

exchange rates at the date when the fair values are determined.

Non-monetary items that are measured in terms of historical cost in a foreign currency are

translated using the exchange rates at the date of the translations.

Page 65



Conversion of foreign currencies (Cont’d)

Group entities

The results and financial position of all the Group entities (none of which has the currency

of a hyperinflationary economy) and the Company that have a functional currency different

from the presentation currency are translated into the presentation currency as follows:

(i) Assets and liabilities (including comparatives) are translated at the closing exchange

rates at the end of reporting period;

(ii) Income and expenses for each statement presenting profit or loss and other

comprehensive income (i.e. including comparatives) shall be translated at exchange

rates at the dates of transactions; and

(iii) All resulting currency translation differences are recognised in other comprehensive

income and accumulated in the currency translation reserve.

Property, plant and equipment and depreciation

All items of property, plant and equipment are initially recorded at cost. Subsequent

to recognition, property, plant and equipment are measured at cost less accumulated

depreciation and any accumulated impairment losses. The cost includes the cost of replacing

part of the property, plant and equipment and borrowing costs that are directly attributable

to the acquisition, construction or production of a qualifying property, plant and equipment.

The cost of an item of property, plant and equipment is recognised as an asset if, and only if,

it is probable that future economic benefits associated with the item will flow to the Group

and the cost of the item can be measured reliably.

When significant parts of property, plant and equipment are required to be replaced in

intervals, the Group recognises such parts as individual assets with specific useful lives

and depreciation, respectively. Likewise, when a major inspection is performed, its cost is

recognised in the carrying amount of the property, plant and equipment as a replacement if

the recognition criteria are satisfied. All other repair and maintenance costs are recognised

in the statement of comprehensive income as incurred.

Depreciation is computed on a straight-line basis over the estimated useful life of the assets

as follows:

Buildings and farm structures 10 to 30 years

Leasehold improvements 3 to 15 years

Plant and machinery 3 to 10 years

Office equipment 3 to 8 years

Vehicles 4 to 8 years

Assets under construction are not depreciated.

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Property, plant and equipment and depreciation (Cont’d)

The carrying values of property, plant and equipment are reviewed for impairment when

events or changes in circumstances indicate that the carrying values may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year

end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future

economic benefits are expected from its use or disposal. Any gain or loss arising on de-

recognition of the asset is included in the consolidated income statement in the year the

asset is derecognised.

Prepaid leases

Prepaid leases represent upfront payments to acquire long-term interest in the usage of

land and payments in advance for leasing farms, which are stated at cost and are amortised

over the period of the lease on a straight-line basis to profit or loss.

Prepaid leases which are to be amortised in the next twelve months or less are classified

as current assets.

Financial assets

Financial assets, other than hedging instruments, can be divided into the following

categories: financial assets at fair value through profit or loss, held-to-maturity investments,

loans and receivables and available-for-sale financial assets. Financial assets are assigned

to the different categories by management on initial recognition, depending on the purpose

for which the assets were acquired. The designation of financial assets is re-evaluated and

classification may be changed at the reporting date with the exception that the designation

of financial assets at fair value through profit or loss is not revocable.

All financial assets are recognised on their trade date – the date on which the Company and

the Group commit to purchase or sell the asset. Financial assets are initially recognised at

fair value, plus directly attributable transaction costs except for financial assets at fair value

through profit or loss, which are recognised at fair value.

De-recognition of financial instruments occurs when the rights to receive cash flows from

the investments expire or are transferred and substantially all of the risks and rewards of

ownership have been transferred. An assessment for impairment is undertaken at least at

the end of each reporting period whether or not there is objective evidence that a financial

asset or a group of financial assets is impaired.

Financial assets and financial liabilities are offset and the net amount presented in the

statement of financial position when, and only when, the Group currently has a legally

enforceable right to set off the recognised amounts; and intends either to settle on a net

basis, or to realise the asset and settle the liability simultaneously.

Page 67



Financial assets (Cont’d)

Non-compounding interest and other cash flows resulting from holding financial assets are

recognised in profit or loss when received, regardless of how the related carrying amount

of financial assets is measured.

The Group and the Company do not hold any financial assets at fair value through profit or

loss, available-for-sale investments or held-to-maturity investments.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market. They arise when the Group provides

money, goods or services directly to a debtor with no intention of trading the receivables.

They are included in current assets, except for maturities greater than 12 months after the

end of reporting period. These are classified as non-current assets.

Loans and receivables include trade and other receivables (excluding prepayment) and cash

and bank balances. They are subsequently measured at amortised cost using the effective

interest method, less allowance for impairment. If there is objective evidence that the asset

has been impaired, the financial asset is measured at the present value of the estimated

future cash flows discounted at the original effective interest rate. Impairment losses are

reversed in subsequent periods when an increase in the asset’s recoverable amount can be

related objectively to an event occurring after the impairment was recognised, subject to

a restriction that the carrying amount of the asset at the date the impairment is reversed

does not exceed what the amortised cost would have been had the impairment not been

recognised. The impairment or write-back is recognised in the consolidated income

statement.

Cash and cash equivalents

Cash and cash equivalents comprise cash and bank balances. For the purpose of the

statement of cash flows, bank overdrafts that are repayable on demand and that form an

integral part of the Group’s cash management are included in cash and cash equivalents.

Discontinued operations

A discontinued operation is a component of an entity that either has been disposed of, or

that is classified as held-for-sale and:

(a) represents a separate major line of business or geographical area of operations; or

(b) is part of a single co-ordinated plan to dispose of a separate major line of business or

geographical area of operations; or

(c) is a subsidiary acquired exclusively with a view to resale.

Page 68



Discontinued operations (Cont’d)

Results from operations qualifying as discontinued operations are presented separately as

a single amount on the income statement.

Biological assets

Biological assets are measured at their fair value less costs to sell or at cost for abalones

with different sizes, depending on the availability of market prices and the commencement

of revenue-generating process.

The fair value assessed using the market approach is based on contracted selling prices.

Where contracted selling prices are not available, recent market prices for similar assets

with adjustments made thereto to reflect the condition and utility of the appraised assets

relative to the market comparative are used.

The cost approach is used where market prices or other reliable indicators of prices for

biological assets are not available.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated using

the first-in, first-out method.

Net realisable value represents the estimated selling price less all estimated costs of

completion and costs to be incurred in marketing, selling and distribution.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the

issuance of new ordinary shares are deducted against the share capital account.

Dividends

Final dividends proposed by the directors are not accounted for in shareholders’ equity

as an appropriation of retained profit, until they have been approved by the shareholders

in a general meeting. When these dividends have been approved by the shareholders and

declared, they are recognised as a liability.

Interim dividends are simultaneously proposed and declared, because the articles of

association of the Company grant the directors the authority to declare interim dividends.

Consequently, interim dividends are recognised directly as a liability when they are proposed

and declared.

Page 69



Non-derivative financial liabilities

The Group’s financial liabilities include trade and other payables, convertible loans and loans

and borrowings excluding advances from customers.

Financial liabilities are recognised when the Group becomes a party to the contractual

agreements of the instrument. All interest-related charges are recognised as an expense

in “finance cost” in the profit or loss. Financial liabilities are derecognised if the Group’s

obligations specified in the contract expire or are discharged or cancelled.

Financial assets and financial liabilities are offset and the net amount presented in the

statement of financial position when, and only when, the Group currently has a legally

enforceable right to set off the recognised amounts; and intends either to settle on a net

basis, or to realise the asset and settle the liability simultaneously.

Borrowings

Borrowings are recognised initially at the fair value of proceeds received less attributable

transaction costs, if any. Borrowings are subsequently stated at amortised cost which is the

initial fair value less any principal repayments. Any difference between the proceeds (net of

transaction costs) and the redemption value is taken to the profit or loss over the period of

the borrowings using the effective interest method. The interest expense is chargeable on

the amortised cost over the period of the borrowings using the effective interest method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised as

well as through the amortisation process.

Borrowings which are due to be settled within 12 months after the end of the reporting period

are included in current borrowings in the statement of financial position even though the

original term was for a period longer than twelve months and an agreement to refinance,

or to reschedule payments, on a long-term basis is completed after the end of the reporting

period. Borrowings to be settled within the Group’s normal operating cycle are classified

as current. Other borrowings due to be settled more than twelve months after the end of

the reporting period are included in non-current borrowings in the statement of financial

position.

Convertible loans

Convertible loan is regarded as compound instrument, consisting of a liability component

and an equity component. The component parts of compound instruments are classified

separately as financial liabilities and equity in accordance with the substance of the

contractual arrangement. At the date of issue, the fair value of the liability component is

estimated using the prevailing market interest rate for a similar non-convertible instrument.

This amount is recorded as a non-current liability on an amortised cost basis until extinguished

upon conversion or at the instrument’s maturity date. The equity component attributable

to the warrants is determined by deducting the amount of the liability component from the

fair value of the compound instrument as a whole. This balance is recognised and included

in equity, net of income tax effects, and is not subsequently remeasured. An appropriate

amount is transferred to the share capital account as and when the warrants are exercised.

Page 70



Non-derivative financial liabilities (Cont’d)

Trade and other payables

Trade and other payables are initially measured at fair value, and subsequently measured

at amortised cost, using the effective interest method.

Derivative financial instruments

The Group does not trade derivative financial instruments for speculative purposes.

Embedded derivatives are separated from the host contract and accounted for separately if

the economic characteristics and risks of the host contract and the embedded derivative are

not closely related, a separate instrument with the same terms as the embedded derivative

would meet the definition of a derivative, and the combined instrument is not measured at

fair value through profit or loss.

Derivatives are recognised initially at fair value, and attributable transaction costs are

recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are

measured at fair value, and changes therein are accounted for as described below.

Determination of fair value of financial instruments

The fair values of quoted financial instruments are based on current bid prices. If the market

for a financial instrument is not active or is unquoted, the Company establishes fair value

by using valuation techniques. These include the use of recent arm’s length transactions,

reference to other instruments that are substantially the same, discounted cash flow

analysis, and option pricing models, making maximum use of market inputs. Where fair

value of unquoted instruments cannot be measured reliably, fair value is determined by the

transaction price.

Income taxes

Current income tax for current and prior periods is recognised at the amount expected to

be paid to or recovered from the tax authorities, using the tax rates and tax laws that have

been enacted or substantively enacted by the end of the reporting period.

Deferred income tax is recognised for all temporary differences arising between the tax

bases of assets and liabilities and their carrying amounts in the financial statements except

when the deferred income tax arises from the initial recognition of goodwill or an asset or

liability in a transaction that is not a business combination and affects neither accounting

or taxable profit or loss at the time of the transaction.

A deferred income tax liability is recognised on temporary differences arising on investments

in subsidiaries, except where the Group is able to control the timing of the reversal of the

temporary difference and it is probable that the temporary difference will not reverse in

the foreseeable future.

Page 71



Income taxes (Cont’d)

Deferred tax is measured at the tax rates that are expected to be applied to the temporary

differences when they reverse, based on the laws that have been enacted or substantively

enacted at the reporting date. A deferred tax asset is recognised for unused tax losses, tax

credits and deductible temporary differences, to the extent that it is probable that future

taxable profits will be available against which they can be utilised. Deferred tax assets are

reviewed at each reporting date and are reduced to the extent that it is no longer probable

that the related tax benefit will be realised.

Deferred income tax is measured:

(i) at the tax rates that are expected to apply when the related deferred income tax

asset is realised or the deferred income tax liability is settled, based on tax rates and

tax laws that have been enacted or substantively enacted by the date of the financial

position; and

(ii) based on the tax consequence that will follow from the manner in which the Group

expects, at the date of the financial position, to recover or settle the carrying amounts

of its assets and liabilities.

Current and deferred income taxes are recognised as income or expense in the profit or

loss, except to the extent that the tax arises from a business combination or a transaction

which is recognised either in other comprehensive income or directly in equity. Deferred tax

arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset

current tax liabilities and assets and they relate to income taxes levied by the same tax

authorities on the same taxable entity, or on different tax entities, provided they intend to

settle current tax liabilities and assets on a net basis or their tax assets and liabilities will

be realised simultaneously.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially

all the risks and rewards of ownership to the lessee. All other leases are classified as

operating leases.

The Group as lessee – operating lease

Rentals on operating leases are charged to profit or loss on a straight-line basis over

the lease term. Lease incentives, if any, are recognised as an integral part of the net

consideration agreed for the use of the leased asset. Penalty payments on early termination,

if any, are recognised in profit or loss when incurred.

The land use rights held by the Group are regarded as operating leases. The amounts paid

for these rights are treated as lease prepayments and are amortised over the lease terms.

Contingent rents are mainly determined as a percentage of revenue in excess of a specified

amount during the month. They are charged to the profit or loss when incurred.

Page 72



Leases (Cont’d)

The Group as lessor – operating lease

Assets leased out under operating leases are included in property, plant and equipment and

are stated at cost. Rental income (net of any incentives given to lessees) is recognised on

a straight-line basis over the lease term.

Employee benefits

Pension obligations

The Group participates in the defined contribution national pension schemes as provided

by the laws of the countries in which it has operations.

Pursuant to the relevant regulations of the PRC government, the employees of the

subsidiaries which operate in the PRC are required to participate in a central pension scheme

operated by the local municipal government (the “Central Pension Scheme”), whereby the

PRC subsidiaries are required to contribute a certain percentage of the basic salaries of

their employees to the Central Pension Scheme. The local municipal government undertakes

to assume the retirement benefits obligations of all existing and future retired employees of

the PRC subsidiaries. The only obligation of the PRC subsidiaries with respect to the Central

Pension Scheme is to pay the ongoing required contributions under the Central Pension

Scheme. Contributions under the Central Pension Scheme are charged to the statement

of comprehensive income as incurred. The assets of the Central Pension Scheme are held

separately from those of the PRC subsidiaries in independently administered funds.

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays

fixed contributions into a separate entity and will have no legal or constructive obligation

to pay further amounts. Obligations for contributions to define contribution pension plans

are recognised as an employee benefit expense in profit or loss in the periods during which

services are rendered by employees.

Employee leave entitlements

Employee entitlements to annual leave are recognised when they accrue to employees.

Accrual is made for the unconsumed leave as a result of services rendered by employees

up to the end of each reporting period.

Page 73



Key management personnel

Key management personnel are those persons having the authority and responsibility for

planning, directing and controlling the activities of the entity. Directors and senior managers

are considered key management personnel.

Related parties

A related party is defined as follows:

(a) A person or a close member of that person’s family is related to the Group and

Company if that person:

(i) has control or joint control over the Company;

(ii) has significant influence over the Company; or

(iii) is a member of the key management personnel of the Group or Company or of a

parent of the Company.

(b) An entity is related to the Group and the Company if any of the following conditions

applies:

(i) the entity and the Company are members of the same group (which means that

each parent, subsidiary and fellow subsidiary is related to the others);

(ii) one entity is an associate or joint venture of the other entity (or an associate or

joint venture of a member of a group of which the other entity is a member);

(iii) both entities are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate

of the third entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either

the Company or an entity related to the Company. If the Company is itself such

a plan, the sponsoring employers are also related to the Company;

(vi) the entity is controlled or jointly controlled by a person identified in (a);

(vii) a person identified in (a) (i) has significant influence over the entity or is a

member of the key management personnel of the entity (or of a parent of the

entity); or

(viii) the entity, or any member of a group of which it is a part, provides key

management personnel services to the reporting entity or to the parent of the

reporting entity.

Page 74



Impairment of non-financial assets

The carrying amounts of the Company’s non-financial assets subject to impairment are

reviewed at the end of each reporting period to determine whether there is any indication

of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

If it is not possible to estimate the recoverable amount of the individual asset, then the

recoverable amount of the cash-generating unit to which the assets belong will be identified.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which

there are separately identifiable cash flows (cash-generating units). As a result, some assets

are tested individually for impairment and some are tested at cash-generating unit level.

Individual assets or cash-generating units are tested for impairment whenever events or

changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s or cash-generating

unit’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher

of fair value, reflecting market conditions less costs to sell and value-in-use, based on an

internal discounted cash flow evaluation. Impairment losses recognised for cash-generating

units are charged pro rata to the other assets in the cash-generating unit. With the exception

of goodwill, all assets are subsequently reassessed for indications that an impairment loss

previously recognised may no longer exist.

Any impairment loss is charged to the profit or loss. An impairment loss is reversed if there

has been a change in the estimates used to determine the recoverable amount or when

there is an indication that the impairment loss recognised for the asset no longer exists or

decreases.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not

exceed the carrying amount that would have been determined if no impairment loss had

been recognised. A reversal of an impairment loss is recognised as income in profit or loss.

Government grants

Government grants are recognised initially as deferred income at fair value when there

is reasonable assurance that they will be received and the Group will comply with the

conditions associated with the grant.

Grants that compensate the Group for expenses incurred are recognised in profit or loss

as other income on a systematic basis in the same periods in which the expenses are

recognised. Where the grant relates to an asset, the fair value is credited to a deferred

income account and is released to profit or loss over the expected useful life of the asset.

Page 75



Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of

qualifying assets, which are assets that necessarily take a substantial period of time to get

ready for their intended use or sale, are added to the cost of those assets, until such time as

the assets are substantially ready for their intended use or sale. Investment income earned

on the temporary investment of specific borrowings pending their expenditure on qualifying

assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are

incurred.

Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares.

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders

of the Company by the weighted average number of ordinary shares outstanding during

the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary

shareholders and the weighted average number of ordinary shares outstanding, adjusted for

the effects of all dilutive potential ordinary shares, which comprise warrants and number of

shares to be issued upon redemption of convertible bonds.

Operating segments

An operating segment is a component of the Group that engages in business activities from

which it may earn revenues and incur expenses, including revenues and expenses that relate

to transactions with any of the Group’s other components. Operating segments are reported

in a manner consistent with the internal reporting provided to the chief operating decision-

maker. The Chief Executive Officer has been identified as the chief operating decision-maker

who makes strategic resources allocation decisions.

Contingencies

A contingent liability is:

(a) a possible obligation that arises from past events and whose existence will be confirmed

only by the occurrence or non-occurrence of one or more uncertain future events not

wholly within the control of the Group; or

(b) a present obligation that arises from past events but is not recognised because:

(i) It is not probable that an outflow of resources embodying economic benefits will

be required to settle the obligation; or

(ii) The amount of the obligation cannot be measured with sufficient reliability.

Page 76



Contingencies (Cont’d)

Contingent liabilities are not recognised on the balance sheet of the Group, except for

contingent liabilities assumed in a business combination that are present obligations and

which the fair values can be reliably determined.

Revenue recognition

Revenue from the sale of goods in the course of ordinary activities is measured at the fair

value of the consideration received or receivable, estimated customer returns, rebates and

other similar allowances.

Sale of goods

Revenue from sales of goods is recognised when all the following conditions are satisfied:

• the Group has transferred to the buyer the significant risks and rewards of ownership

of the aquacultural products and processed marine products;

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the transaction will flow to

the Group; and

• the costs incurred or to be incurred in respect of the transaction can be measured

reliably.

Interest income

Interest income is recognised on a time-apportionment basis using the effective interest

rate method.

Rental income

Rental income is recognised on a straight-line basis over the lease term.

Page 77


3 Revenue

Significant categories of revenue, excluding inter-company transactions and applicable

goods and services tax, are detailed as follows:

2016 2015

The Group RMB’000 RMB’000

Continuing operations:

Sales of live marine products 5,932 3,759

Sales of processed marine products 4,443 1,085

10,375 4,844

Discontinued operations – –

10,375 4,844

4 Property, plant and equipment

Buildings

and farm

structures

Leasehold

improvement

Plant and

machinery

Office

equipment Vehicles

Construction-

in-progress Total

The Group RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Cost

At 1 January 2015 728,471 3,312 101,444 2,295 591 32,379 868,492

Additions – – – 113 – – 113

Disposals (5,232) – – – – – (5,232)

At 31 December 2015 723,239 3,312 101,444 2,408 591 32,379 863,373

Additions – 877 – 10 3 – 890

Disposals – – (12) – (196) – (208)

At 31 December 2016 723,239 4,189 101,432 2,418 398 32,379 864,055

Accumulated depreciation

At 1 January 2015 280,545 1,809 62,132 1,412 174 – 346,072

Depreciation charge 15,920 – 2,461 113 36 – 18,530

Disposals (3,902) – – – – – (3,902)

At 31 December 2015 292,563 1,809 64,593 1,525 210 – 360,700

Depreciation charge 27,690 347 6,604 49 59 – 34,749

Disposals – – (12) – (185) – (197)

At 31 December 2016 320,253 2,156 71,185 1,574 84 – 395,252

Accumulated impairment

At 1 January 2015 203,212 1,503 22,556 735 296 32,379 260,681

Impairment loss for the year 42,449 – 1,884 49 (47) – 44,335

At 31 December 2015 245,661 1,503 24,440 784 249 32,379 305,016

Impairment loss for the year 8,593 – 630 – (81) – 9,142

At 31 December 2016 254,254 1,503 25,070 784 168 32,379 314,158

Carrying amount

At 31 December 2016 148,732 530 5,177 60 146 – 154,645

At 31 December 2015 185,015 – 12,411 99 132 – 197,657

Page 78


4 Property, plant and equipment (Cont’d)

Impairment testing

The recoverable amount of the Group’s property, plant and equipment, and prepaid leases,

was based on the cash-generating unit’s (the “CGU”) fair value less costs to sell, which

was higher than value-in-use, as determined by an independent professional valuer with

recognised and relevant professional qualifications and experience within the local market

and the category of properties to be valued. The determination of fair values include use

of unobservable inputs.

The fair value less cost to sell of property and plant and machinery (Level 3 fair value

hierarchy) was determined based on the cost approach. The cost approach is based on the

cost to reproduce or replace under new condition with current market prices for similar

assets, with allowance for accrued depreciation arising from the conditions, utility, age, wear

and tear, or obsolescence present (physical, functional or economic).

The fair value less cost to sell of land use rights (Level 3 fair value hierarchy) was determined

based on the market approach. The market approach is based on sale in their existing states

with the benefit of vacant possession and by making reference to comparable sales evidence

as available in the relevant market, subject to allowance for variable adjustment factors.

During the financial year ended 31 December 2016, the Group tested the CGUs for

impairment, and recognised an impairment charge of RMB9,142,000 (2015: RMB44,335,000),

and RMB83,000 (2015: RMB1,492,000) on property, plant and equipment and prepaid leases,

respectively, being the excess of the carrying amount over the recoverable amount.

The recoverable amount of certain property, plant and equipment and prepaid leases

exceeded their carrying amounts by RMB28,843,000 and RMB137,000, respectively.

Management had considered it appropriate not to recognise a reversal of impairment

loss on these amounts which had no direct bearing on the operating performance of the

Group and the Company. At this juncture, management’s focus is on completion of the debt

restructuring and improving the operating performance to shore up the balance sheet of

the Group and the Company.

As at 31 December 2016, the carrying amount of the Group’s farm structures and office

buildings constructed on land leased from third parties (“Collectively-owned Land”)

and prepaid leases amounted to RMB121,193,000 and RMB1,214,000 (RMB154,679,000 and

RMB1,352,000), respectively. In assessing the fair value of these farm structures and office

buildings and the related prepaid leases, the valuer has made certain key assumptions as

follows:

(1) the Collectively-owned Land are freely transferable to any third party in the open

market; and

(2) consent for the land transfer will be granted by the individual owners of the land.

Page 79


4 Property, plant and equipment (Cont’d)

Impairment testing (Cont’d)

It was assumed that the relevant regulatory documents required for the land transfer had

been obtained. As at 31 December 2016, no separate transfer agreement had been entered

into with the individual owners of the land to transfer the ownership to the Group.

A 3% unfavourable change in the estimation of selling prices and replacement cost of plant

and equipment would result in further impairment loss by RMB1,332,000 (2015:RMB5,531,000)

As at 31 December 2016 and 2015, the entire carrying amount of property, plant and

equipment has been pledged to third party lenders and the holders of convertible bonds.

5 Prepaid leases

Land

use rights

Prepayment

for lease of

land Total

The Group RMB’000 RMB’000 RMB’000

At 1 January 2015 5,032 3,427 8,459

Impairment loss for the year 286 (1,778) (1,492)

Disposals – (56) (56)

Amortisation for the year (178) (237) (415)

At 31 December 2015 5,140 1,356 6,496

Impairment loss for the year – (83) (83)

Disposals – – –

Amortisation for the year (175) (55) (230)

At 31 December 2016 4,965 1,218 6,183

2016 2015


Non-current portion 6,007 6,007

Current portion included as prepayment under

current assets (Note 9) 176 489

Total 6,183 6,496

The Group’s business of cultivation and sale of abalone is attributable to the live marine

products cash-generating unit (the “CGU”).

Impairment testing for prepaid leases is set out in Note 4.

As at 31 December 2016 and 2015, the entire carrying amount of property, plant and

equipment has been pledged to third party lenders and the holders of convertible bonds.

Page 80


6 Subsidiaries

2016 2015

The Company RMB’000 RMB’000

Unquoted equity shares, at cost 1,405,042 1,405,042

Less: Accumulated impairment loss

At 1 January 1,229,559 1,142,915

Amount recognised during the year 17,924 86,644

At 31 December 1,247,483 1,229,559

157,559 175,483

The subsidiaries are:

Name

Country of

incorporation/

principal place

of business

Percentage

of equity held

Principal

activities

2016 2015

% %

Oceanus Aquaculture

Group Pte. Ltd.(a)

Singapore 100 100 Investment

holding

Oceanus Food Group

Pte. Ltd.(a)

Singapore 100 100 Investment

holding

Oceanus Food Group

Limited(b)

Hong Kong 100 100 Investment

holding

Subsidiary held through

Oceanus Aquaculture

Group Pte. Ltd.

Oceanus (China) Aquaculture

Co., Ltd(b)

People’s Republic

of China

100 100 Aquaculture

production and

abalone farming

and sale of

products.


Oceanus Food Group Limited

Zhangzhou Oceanus Food

Co., Ltd(b)

People’s Republic

of China

100 100 Inactive

Page 81


6 Subsidiaries (Cont’d)

Name

Country of

incorporation/

principal place

of business

Percentage

of equity held

Principal

activities

2016 2015

% %


Oceanus Food Group

Pte. Ltd.

Oceanus (Shanghai)

Restaurant Management

Co., Ltd(b)

People’s Republic

of China

100 100 Inactive

Oceanus Food (Hong Kong)

Company Limited(b)

Hong Kong 100 100 Inactive

Oceanus (Singapore)


Pte Ltd(a)

Singapore 100 100 Inactive

Oceanus (Taiwan) Restaurant

Limited Company(b)

Taiwan 100 100 Inactive


Oceanus (Shanghai)


Co., Ltd

Shanghai Oceanus Wujiang

Road Restaurant

Co., Ltd(b)(c)

People’s Republic

of China

100 100 Inactive

(a) Audited by Foo Kon Tan LLP

(b) Audited by Foo Kon Tan LLP for consolidation purposes

(c) The subsidiary has ceased operation and is in the process of liquidation and deregistration since 2011

Impairme nt testing

During the financial year ended 31 December 2016, the Company tested investment

in a subsidiary, which is attributable to the live marine products cash-generating unit

(the “CGU”), for impairment and recognised an impairment loss of RMB17,924,000

(2015: RMB86,644,000). The recoverable amount was determined based on fair value less

costs to sell (Level 3 fair value hierarchy), as determined by an independent professional

valuer based on the market value and cost approach, which was higher than value-in-use.

Further details of the determination of the recoverable amount is set out in Note 4.

A first charge over the entire equity interests in 2 subsidiaries of the Group were created

in favour of a third party lender and 2 existing warrant holders.

Page 82


7 Inventories

2016 2015


Inventories, at cost 180 110

8 Trade receivables

2016 2015


Third parties 65,663 65,726

Less: Impairment loss (65,652) (65,652)

11 74

Trade receivables have credit terms of up to 60 days (2015 – up to 60 days).

At the reporting date, included in trade receivables were amounts of RMB62,362,000

(2015 – RMB62,362,000) due from the Group’s two major customers (2015: two major

customers).

An analysis of trade receivables at the reporting date is as follows:

2016 2015


Not past due and not impaired 11 74

Past due and impaired 65,652 65,652

65,663 65,726

Impairment loss on trade receivables (65,652) (65,652)

11 74

Movement in the impairment loss on trade receivables is as follows:

2016 2015


At 1 January and 31 December 65,652 65,652

Trade receivables denominated in RMB has been fully impaired at the reporting date. The

carrying value of trade receivables of RMB11,000 is denominated in SGD.

Refer to Note 31 for foreign currency risk and credit risk exposed.

Page 83


9 Other receivables


2016 2015 2016 2015

RMB’000 RMB’000 RMB’000 RMB’000

Current

Non-trade amounts due

from subsidiaries – – 1,105,388 1,050,212

Less: Impairment loss – – (1,095,913) (1,050,212)

– – 9,475 –

Other receivables 6,119 21,696 4,371 3,129

Less: Impairment loss (1,401) (18,062) – –

4,718 3,634 4,371 3,129

Deposits 95 514 – –

Loans and receivables 4,813 4,148 4,371 3,129

Prepaid leases

– current portion (Note 5) 176 489 – –

Prepayments 36 48 – –

Total 5,025 4,685 13,846 3,129

Movement in impairment loss on other receivables


2016 2015 2016 2015

RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 18,062 13,666 1,050,212 1,050,143

Allowance made (Note 21) 44 4,396 770 14,402

Allowance reversed – – (2,953) –

Allowance utilised (16,705) – – –

Exchange differences – – 47,884 (14,333)

At 31 December 1,401 18,062 1,095,913 1,050,212

The other receivables are denominated in the following currencies:


2016 2015 2016 2015

RMB’000 RMB’000 RMB’000 RMB’000

Renminbi 434 517 – –

Singapore dollar 4,561 4,134 13,846 3,129

Hong Kong dollar 5 11 – –

New Taiwan dollar 25 23 – –

5,025 4,685 13,846 3,129

Page 84


10 Biological assets

2016 2015


At 1 January 2,418 41

Additions 364 981

Disposals (5,932) (3,759)

Increase in fair value less costs to sell 9,554 5,155

At 31 December 6,404 2,418

The fair value of biological assets related to juvenile abalones was determined by an

independent firm of professional. The fair value was based on the market value, being the

estimated amount for which a property could be exchanged on the date of valuation between

a willing buyer and a willing seller in an arm’s length transaction.

The valuation is based on the market approach and cost approach for abalones with different

sizes, depending on the availability of market prices and the commencement of revenue-

generating process.

There was no physical count of biological assets as at 31 December 2016 and 2015.

11 Cash and bank balances


2016 2015 2016 2015

RMB’000 RMB’000 RMB’000 RMB’000

Cash at bank 9,545 2,209 3,170 151

As per consolidated

statement of cash flows 9,545 2,209 3,170 151

As at 31 December 2016, the Group had cash and bank balances of RMB4,742,000

(2015 – RMB1,349,000) placed with banks in the People’s Republic of China (“PRC”).

Conversion of RMB into foreign currencies is currently subject to the foreign exchange

control regulations in PRC.

Cash and bank balances are denominated in the following currencies,


2016 2015 2016 2015

RMB’000 RMB’000 RMB’000 RMB’000

Renminbi 4,742 1,349 – –

Singapore dollar 4,770 835 3,156 151


New Taiwan dollar 15 1 14 –

9,545 2,209 3,170 151

Page 85


12 Share capital

2016 2015 2016 2015

The Company Number of ordinary shares RMB’000 RMB’000

Issued and fully paid,

with no par value

At 1 January 4,566,852,832 3,637,941,547 2,413,255 2,373,685

Issuance of settlement

shares and accrued

interest shares – 928,911,285 – 39,570

At 31 December 4,566,852,832 4,566,852,832 2,413,255 2,413,255

2016 2015

The Company S$’000 S$’000

Issued and fully paid share capital denominated in

original currency:

At 1 January 475,840 466,936

Issuance of shares – 8,904

At 31 December 475,840 475,840

S$ denotes Singapore dollars.

The equity structure (number and amount of equity issued) of the Company and the

Group represented that of the Company, being the legal parent for the purpose of reverse

acquisition accounting.

On 29 September 2015, the Company issued 218,276,492 shares at S$0.00864 per share to

the financing shareholders, of which 140,355,396 shares were for partial settlement of the

outstanding loans; and 710,634,793 shares, comprising 201,322,979 shares at S$0.013 per

share and 509,311,814 shares at S$0.00864 per share, as partial settlement of the accrued

interest on the convertible bonds.

13 Reserves


2016 2015 2016 2015

RMB’000 RMB’000 RMB’000 RMB’000

Capital reserve (1,137,504) (1,137,504) 11,229 11,229

Warrant reserve 101,651 101,651 101,651 101,651

Currency translation

reserve (994) 29,805 1,852 26,132

Statutory reserve 39,262 39,262 – –

Accumulated losses (1,906,468) (1,844,232) (2,947,090) (2,910,597)

Total (2,904,053) (2,811,018) (2,832,358) (2,771,585)

Page 86


13 Reserves (Cont’d)

Capital reserve

The Company’s capital reserve comprises the excess of the fair value of the non-controlling

interests in 2 subsidiaries over the purchase considerations for the acquisitions of these

non-controlling interests during the financial year ended 31 December 2012.

The Group’s capital reserve relates to the excess of purchase consideration over the fair

value of the net assets of Oceanus Aquaculture Group Pte. Ltd. acquired under a reverse

takeover in 2008.

Warrant reserve

Warrant reserve relates to the fair value of warrants issued by the Company in 2009.

During the financial year ended 31 December 2015, the Company

– issued 707,692,308 warrants to the third party lender with each warrant exercisable

into one share at the exercise price of S$0.013 per warrant (Note 15);

– issued 47,237,779 warrants to the financing shareholders with each warrant exercisable

into one share at the exercise price of S$0.013 per warrant (Note 15); and

– cancelled existing 1,018,565,587 warrants under Convertible Loan 2012 and issued

2,971,069,187 warrants under the refinanced Convertible Loan 2015 to the existing

warrant holders, with each warrant exercisable into one share at the exercise price of

S$0.02167 per warrant.

As at 31 December 2016 and 2015, the number of unexercised warrants is 3,725,999,274

comprising 754,930,087 warrants with an exercise price of S$0.013 per warrant and

2,971,069,187 warrants with an exercise price of S$0.02167 per warrant.

Currency translation reserve

Currency translation reserve records exchange differences arising from the translation of

the financial statements of Group entities whose functional currencies are different from

that of the Group’s presentation currency.

Statutory reserve

Pursuant to the relevant laws and regulations in the PRC applicable to foreign investment

enterprise and the Articles of Association of subsidiaries of the Group, the subsidiaries are

required to maintain statutory surplus reserve fund which is non-distributable. Appropriations

to such reserve are made out of net profit after tax of the statutory financial statements of

the subsidiaries. The subsidiaries are required to transfer at least 10% of its profit after tax

as reported in its PRC statutory financial statements to the statutory surplus reserve fund

until the balance reaches 50% of the registered capital of the respective subsidiary. The

statutory surplus reserve fund may be used to make up prior year losses incurred and, with

approval from relevant government authority, to increase capital.

Page 87


14 Deferred tax liabilities

2016 2015

The Group and The Company RMB’000 RMB’000

At the beginning of year – 1,944

Recognised in profit or loss (Note 24) – (1,890)

Exchange differences – (54)

At the end of year – –

The balance comprises tax on the following temporary differences:

Convertible

loans Total

The Group and the Company RMB’000 RMB’000

At 1 January 2015 1,944 1,944

Recognised in profit or loss (1,890) (1,890)

Exchange differences (54) (54)

At 31 December 2015 and 2016 – –

Unrecorded deferred tax assets

Deferred tax assets have not been recognised in respect of the following items:

2016 2015


Tax effect attributable to:

Unutilised tax losses 139,623 182,100

The Group has unutilised tax losses as follows:

2016 2015


Unutilised tax losses 548,326 1,159,390

548,326 1,159,390

The tax losses are subject to agreement by the tax authority and compliance with tax

regulations in the PRC in which the subsidiary operates. The deductible temporary

differences do not expire under current tax legislation. Deferred tax assets have not been

recognised in respect of these items because it is not probable that future taxable profit

will be available against which the Group can utilise the benefits.

Page 88


14 Deferred tax liabilities (Cont’d)

The unrecognised tax losses will expire as follows:

2016 2015


Year 2016 – 651,264

Year 2017 226,404 226,404

Year 2018 178,849 178,849

Year 2019 88,633 88,633

Year 2020 14,240 14,240

Year 2021 40,200 –

548,326 1,159,390

15 Loans and borrowings

2016 2015

The Group and the Company

RMB’000 RMB’000

Restated

Non-Current

Shareholders (unsecured)(a) 1,894 1,811

Third parties

– secured(b) 959 –

– unsecured(c) 4,796 –

5,755 –

7,649 1,811

Current

Third parties

– secured(b) 1,878 –

– unsecured(c) 6,438 4,093

8,316 4,093

Total 15,965 5,904

(a) The loans from shareholders bear interest at 5% (2015:8%) per annum, and are unsecured and repayable by

2 September 2020.

(b) The loans from third parties are interest-free and secured by all fixed feets of a farm.

(c) The loan from third parties are interest free.

During the year ended 31 December 2015, warrants were issued to the financing shareholders

and a third party lender (Note 13). No assessments were carried out to determine the

allocation of the carrying amounts of loans from shareholders and a third party to the debt

and equity components based on their relative fair values at inception.

Please refer to Note 31 for further details on interest rate risk and liquidity risk.

Page 89


16 Trade payables

2016 2015


Third parties 10,676 10,662

The average credit period on purchase of goods ranges from 0 to 30 days (2015 – 0 to

30 days). The trade payables are non-interest bearing and denominated in RMB.

17 Other payables


2016 2015 2016 2015

RMB’000 RMB’000 RMB’000 RMB’000

Amounts due to subsidiaries – – 1,900 963

Amount due to executive

director 1,000 – 1,000 –

Interest payable 50,147 30,993 50,147 30,993

Accrued expenses 47,298 42,551 15,453 12,765

Accrued staff costs 5,875 5,255 3,468 2,772

Fixed assets vendor 4,891 4,891 – –

Advances from customers 3,076 2,472 – –

Rental deposits 3,444 – – –

Other tax payables 5,850 5,619 5,300 5,068

121,581 91,781 77,268 52,561

The amounts due to the subsidiaries are unsecured, interest-free and repayable on demand.

Other payables are denominated in the following currencies,


2016 2015 2016 2015

RMB’000 RMB’000 RMB’000 RMB’000

Renminbi* 27,527 23,327 – –

Singapore dollar* 85,095 60,333 71,968 47,493


New Taiwan dollar 20 17 – –

112,655 83,690 71,968 47,493

* excludes advance from customers and other tax payables

Page 90


18 Convertible loans

2016 2015


Current

Convertible loans 308,774 295,312

Non-Current

Convertible loans 44,122 42,199

352,896 337,511

At beginning of year 337,511 283,456

Accretion of interest expenses – 34,058

Interest payable – (18,503)

Redemption of loans – –

Transfer of loans due to restructuring – 42,199

Exchange differences 15,385 (3,699)

At end of year 352,896 337,511

On 13 July 2012, the Company entered into agreements with the lenders (the “Lenders”) to

refinance Convertible Loan 2009 with an outstanding principal amount of S$70.2 million

upon maturity. Convertible Loan 2012 is due on 13 July 2015 and carries an interest rate at

5% per annum.

In September 2015, the Company entered into agreements with the lenders (the “Lenders”)

to refinance Convertible Loan 2012 with Convertible Loan 2015. The main terms of the

agreement are as follows:

(a) the terms of the loans for 2 lenders have been extended from 13 July 2015 to

31 December 2016;

(b) the term of the loan of one lender is 60 months from September 2015; and

(c) cancellation of the existing 1,018,565,587 warrants under the Convertible Loan 2012 and

issue of 2,971,069,187 warrants at the exercise price of S$0.02167 per warrant to the

Lenders (Note 13). These warrants are exercisable from 13 July 2015 to 31 December

2016.

The effect of the loan refinancing was a de-recognition of Convertible Loan 2012 and

recognition of Convertible Loan 2015. No assessments were carried out to estimate the fair

value of Convertible Loan 2015 to determine gain or loss on de-recognition of Convertible

Loan 2012 and the allocation of the carrying amount of Convertible Loan 2015 to the liability

and equity components upon initial recognition.

Page 91


18 Convertible loans (Cont’d)

The Lenders shall have the right to request the Group to redeem any unexercised warrants

held by them after the warrant maturity at a redemption premium of 15% of the amount of

their respective loan in proportion to the unexercised warrants. The warrant redemption

premium will be waived if the Group achieves certain prescribed profit and operating cash

flows targets in at least one financial year during the warrant exercise period.

19 Derivative liability

2016 2015


Current

Derivative liabilities 147,549 141,117

Derivative liability relates to the warrant redemption premium (Note 18). No assessment

of the fair value of the warrant redemption premium was performed for the year ended

31 December 2016 and 2015. The movement in derivative liability between 31 December 2016

and 2015 amounting to RMB6,432,000 was due to currency translation difference.

Please refer to Note 31 for further details on interest rate risk and liquidity risk.

20 Other operating income

Continuing

operations

Discontinued

operations Total

2016 2015 2016 2015 2016 2015

The Group RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Rental income 448 24 – – 448 24

Interest income 1 1 – – 1 1

Government grants 512 154 – – 512 154

Scrap sales – 1,025 – – – 1,025

Gain on disposal of property,

plant and equipment – 284 – – – 284

Foreign currency exchange

gain 6,604 18,078 – 103 6,604 18,181

Sundry income 916 1,264 89 3,349 1,005 4,613

8,481 20,830 89 3,452 8,570 24,282

Page 92


21 Other operating expenses

Continuing

operations

Discontinued

operations Total

2016 2015 2016 2015 2016 2015


Professional fees 3,705 3,720 – – 3,705 3,720

Operating lease expenses 641 2,294 – – 641 2,294

Insurance expenses 71 10 – – 71 10

Repair and maintenance 276 162 – – 276 162

Travelling expenses 1,116 627 – – 1,116 627

Loss on disposal of property,

plant and equipment 4 – – – 4 –

Impairment loss on other

receivables (Note 9) 44 4,396 – – 44 4,396

Annual Report fees 255 113 – – 255 113

Consumables 417 205 – – 417 205

Annual listing and related fees 763 620 – – 763 620

Security fees 1,001 – – – 1,001 –

Branding project fees 600 141 – – 600 141

Others 469 1,766 408 12 877 1,778

9,362 14,054 408 12 9,770 14,066

22 Finance costs

Continuing

operations

Discontinued

operations Total

2016 2015 2016 2015 2016 2015


Interest on convertible loan 17,696 35,885 – – 17,696 35,885

Reversal of withholding tax on

interest on convertible loan – (1,664) – – – (1,664)

Loans from shareholders 95 683 – – 95 683

Others – 45 – – – 45

17,791 34,949 – – 17,791 34,949

Page 93


23 Loss before taxation

The following items have been included in arriving at loss before taxation:

Continuing

operations

Discontinued

operations Total

2016 2015 2016 2015 2016 2015


Audit fee

– auditors of the Company 772 738 – – 772 738

Employee benefit expenses:

– Directors’ fees 572 502 – – 572 502

– Directors’ salary of

the company – 158 – – – 158

– Directors’ salary of

the subsidiaries – – – – – –

– Salary of employees other

than directors 5,779 9,576 – 18 5,779 9,594

– Defined contribution plans

included in staff costs 809 1,002 – – 809 1,002

– Other staff welfare 442 538 – – 442 538

7,602 11,776 – 18 7,602 11,794

24 Income tax credit

2016 2015


Current tax expense – –

Deferred tax expense

Origination and reversal of temporary differences

(Note 14) – (1,890)

Tax credit on continuing operations – (1,890)

Page 94


24 Income tax credit (Cont’d)

Reconciliation of effective tax rate

2016 2015


Loss before taxation:

– Continuing operations (61,917) (102,552)

– Discontinued operations (319) 3,422

(62,236) (99,130)

Tax at statutory rate of 25% (2015 – 25%) (15,559) (24,782)

Tax effect on non-deductible expenses 4,377 4,798

Effect of different tax rates of group entities operating in

other jurisdictions 1,132 14,534

Tax effect of unused tax loss not recognised as deferred

tax assets 10,050 3,560

– (1,890)

Allocated to:

2016 2015


Continuing operations – (1,890)

Discontinued operations – –

– (1,890)

25 Other comprehensive loss for the year, net of tax

2016 2015

Before

tax

Tax

expense

Net

of tax

Before

tax

Tax

expense

Net

of tax


Disclosure of tax effect

relating to each component

of other comprehensive

income:

Currency translation

differences (30,799) – (30,799) (19,386) – (19,386)

Page 95


26 Loss per share

From continuing and discontinued operations

2016 2015


Loss after taxation attributable to owners of the Company (62,236) (97,240)

2016 2015

Weighted average number of shares for the purpose of

basic earnings/loss per share 4,566,852,832 3,877,168,015

4,566,852,832 3,877,168,015

Loss per share (fen):

– basic (1.36) (2.51)

– diluted (1.36) (2.51)

From continuing operations

2016 2015


Basic loss per share is based on:

Loss after taxation attributable to owners of the Company (61,917) (100,662)

Loss per share (fen):

– basic (1.36) (2.60)

– diluted (1.36) (2.60)

From discontinued operations

Basic and diluted loss per share for the discontinued operations is 0.01 fen per share

(2015: basic and diluted earnings per share of 0.09 fen per share) based on the loss for the

year from discontinued operations of RMB319,000 (2015 – profit of RMB3,422,000).

Diluted loss per share is similar to basic loss per share as there were no potential dilutive

ordinary shares existed during the year.

Page 96


27 Key management personnel compensations

2016 2015


Short-term benefits 2,646 5,503

Post-employment benefits 115 167

2,761 5,670

28 Operating lease commitments (non-cancellable)

At the end of the reporting period, the Group was committed to making the following

payments in respect of non-cancellable operating leases:

The Group as the lessee

2016 2015


Not later than one year 267 540

Later than one year and not later than five years 240 889

Later than five years – 185

Operating lease payments represent rentals payable by the Group for certain property,

plant and equipment, office premises and land use rights.

The Group as the lessor

2016 2015


Not later than one year 546 –

Later than one year and not later than five years 623 –

Later than five years – –

Page 97


29 Discontinued operations

During the financial year ended 31 December 2011, the Group ceased the operations of the

food and beverage segment which operated restaurant outlets. During the financial year

ended 31 December 2012, the Group ceased production of the Processed Marine Products

operating segment in connection with a change in business strategy.

2016 2015


Other operating income (Note 20) 89 3,452

Staff costs (Note 23) – (18)

Other operating expenses (Note 21) (408) (12)

Profit before income tax (319) 3,422

Income tax – –

Profit for the year (319) 3,422

Cash flows from/(used in) discontinued operations

2016 2015


Net cash generated from/(used in) operating activities 3,470 (706)

Net cash flows for the year 3,470 (706)

30 Business and geographical segments

For management reporting purposes, the Group is organised into the following reportable

operating segments as follows:

Live marine products Cultivation and sale of abalone and others

Trading Sales of processed marine product

Others Corporate office functions

For the purpose of monitoring segment performance and allocating resources, the chief

operating decision maker monitors the tangible and financial assets attributable to each

segment. All assets are allocated to reportable segments. Assets, if any, used jointly by

reportable segments are allocated on the basis of the revenue earned by individual

reportable segments.

The accounting policies of the reportable segments are the same as the Group’s accounting

policies. Segment revenue represents revenue generated from external and internal

customers. Segment profit represents the profit earned by each segment without allocation

of central administration costs and directors’ salaries, investment revenue and finance costs,

and income tax expense. This is the measure reported to the chief operating decision maker

for the purposes of resource allocation and assessment of segment performance.

Page 98


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Page 100


30 Business and geographical segments (Cont’d)

Management monitors the operating results of its business units separately for the purpose

of making decisions about resource allocation and performance assessment.

All assets and liabilities are allocated to the reportable segments based on the operations

of the segments. Unallocated items comprise mainly convertible loans and the associated

derivative liabilities and deferred tax liabilities, and borrowings.

Geographical segments

Revenue and non-current assets information based on geographical location of customers

and assets respectively are as follows:

2016 2015

The Group

Singapore

RMB’000

PRC

RMB’000

Total

RMB’000

SingaporeRMB’000

PRCRMB’000

TotalRMB’000

External revenue 4,443 5,932 10,375 1,085 3,759 4,844Non-current assets 537 160,115 160,652 – 203,664 203,664

Information about major customers

Information on revenue from external customers or group of customers who accounted for

10% or more of the Group’s revenue is as follows:

2016 2015


Customer A 4,377 919

Customer B 1,158 585

Customer C 1,070 560

Customer D 706 484

Customer E 539 414

7,850 2,962

31 Financial risk management objectives

The Group is exposed to financial risks arising from its operations and the use of financial

instruments. The key financial risks included credit risk, liquidity risk, interest rate risk,

foreign currency risk and market price risk. The Group’s overall risk management programme

focuses on the unpredictability of financial markets and seeks to minimise adverse effects

from the unpredictability of financial markets on the Group’s financial performance.

Page 101


31 Financial risk management objectives (Cont’d)

There has been no change to the Group’s exposure to these financial risks or the manner

in which it manages and measures the risk. Market risk exposures are measured using

sensitivity analysis indicated below.

The Group does not hold or issue derivative financial instruments for trading purposes or

to hedge against fluctuations, if any, in interest rates and foreign exchange.

The carrying amounts of financial assets and financial liabilities at the reporting date by

categories are as follows:

2016 2015The Group RMB’000 RMB’000


Trade and other receivables* 4,824 4,222Cash and bank balances 9,545 2,209

14,369 6,431

2016 2015RMB’000 RMB’000

Financial liabilities at amortised cost

Trade and other payables** 123,331 94,352Loans and borrowings 15,965 5,904Convertible loans 352,896 337,511

492,192 437,767

2016 2015RMB’000 RMB’000

Fair value through profit or loss

Derivative liability 147,549 141,117

2016 2015The Company RMB’000 RMB’000


Other receivables* 13,846 3,129Cash and bank balances 3,170 151

17,016 3,280

Financial liabilities at amortised cost

Other payables** 71,968 47,493Loans and borrowings 15,965 5,904Convertible loans 352,896 337,511

440,829 390,908

Fair value through profit or loss

Derivative liability 147,549 141,117

* excludes prepayment and prepaid leases

** excludes advance from customers and other tax payables

Page 102



31.1 Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations

resulting in financial loss to the Group. The carrying amount of loans and receivables

included in the statements of financial position represent the Group and the Company’s

maximum exposure to credit risk in relation to the financial assets.

The Group reviews the recoverable amount of each individual trade debt at the end of each

reporting period to ensure that adequate impairment losses are made for irrecoverable

amounts.

The Group establishes an allowance for impairment that represents its estimate of incurred

losses in respect of trade and other receivables. The allowance account in respect of trade

and other receivables is used to record impairment losses unless the Group is satisfied that

no recovery of the amount owing is possible. At that point, the financial asset is considered

irrecoverable and the amount charged to the allowance account is written off against the

carrying amount of the impaired financial asset.

At the reporting date, other than as disclosed in Note 8 and Note 9, no allowance for

impairment is necessary in respect of trade and other receivables past due and not past

due based on payment history and current assessment.

As the Company and the Group do not hold any collateral, the maximum exposure to credit

risk for each class of financial instruments is the carrying amount of that class of financial

instruments presented on the statements of financial position.

The credit risk on bank balances is limited because the counterparties are banks with good

reputation.

31.2 Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in raising

funds to meet commitments associated with financial instruments that are settled by

delivering cash or another financial asset. Liquidity risk may result from an inability to sell

a financial asset quickly at close to its fair value.

Page 103



31.2 Liquidity risk (Cont’d)

The table below analyses the maturity profile of the Group’s and financial liabilities based

on contractual undiscounted cash flows, including estimated interest payments:

Carrying

amount

Contractual

cash flows

Less than

1 year

Between

2 and 5

years

Over

5 years

The Group RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

2016


Trade and other payables 123,331 123,331 123,331 – –

Convertible loans 352,896 386,365 336,350 50,015 –

Borrowings 15,965 18,321 10,267 8,054 –

Derivative financial liabilities

Derivative liability 147,549 147,549 147,549 – –

639,741 675,566 617,497 58,069 –

2015




Borrowings 5,904 6,574 4,238 2,336 –



578,884 615,645 561,815 53,830 –

Page 104



31.2 Liquidity risk (Cont’d)

Carrying

amount

Contractual

cash flows

Less than

1 year

Between

2 and

5 years

Over

5 years

The Company RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

2016




Borrowings 15,965 18,321 10,267 8,054 –



588,378 624,203 566,134 58,069 –

2015




Borrowings 5,904 6,574 4,238 2,336 –



532,025 568,786 514,956 53,830 –

31.3 Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the

Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group and the Company are not exposed to interest rate risk as they do not hold

variable rate instruments.

31.4 Foreign currency risk

Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to

changes in foreign exchange rates. Currency risk arises when transactions are denominated

in foreign currencies.

The Group and the Company do not have any significant foreign currency risk as they carry

on their operations in their respective functional currencies.

Page 105



31.5 Market price risk

Price risk is the risk that the value of a financial instrument will fluctuate due to changes in

market prices.

The Group does not hold any quoted or marketable financial instruments, and is not exposed

to any movement in market prices.

31.6 Fair values

Definition of fair value

FRSs define fair value as the price that would be received to sell an asset or paid to transfer

a liability in an orderly transaction between market participants at the measurement date.

Fair value measurement of financial instruments

Financial and non-financial assets and liabilities measured at fair value in the statement of

financial position are grouped into three Levels of a fair value hierarchy. The three Levels

are defined based on the observability of significant inputs to the measurement, as follows:

• Level 1 : quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2 : inputs other than quoted prices included within Level 1 that are observable

for the asset or liability, either directly or indirectly

• Level 3 : unobservable inputs for the asset or liability

Page 106



31.6 Fair values (Cont’d)

Fair value measurement of financial instruments (Cont’d)

The following table shows an analysis of assets and liabilities carried at fair value by level

of fair value hierarchy:

Level 1 Level 2 Level 3 Total

RMB’000 RMB’000 RMB’000 RMB’000

The Group

2016

Non-financial assets:

Property, plant and equipment – – 154,645 154,645

Prepaid leases – – 6,183 6,183

Biological assets – – 6,404 6,404

Financial liabilities:

Derivative financial liability – – 147,549 147,549

2015

Non-financial assets:

Property, plant and equipment – – 197,657 197,657

Prepaid leases – – 6,496 6,496

Biological assets – – 2,418 2,418



The Company

2016



2015



Page 107




Fair value measurement of financial instruments (Cont’d)

Fair value measurement of financial instruments

The fair value of the embedded derivative related to the redemption feature of the

convertible loans was determined using the Binomial option pricing model.

The carrying amounts of financial assets and liabilities with a maturity of less than one year

(including trade and other receivables, cash and bank balances, trade and other payables and

loans and borrowings) approximate their fair values because of the short period to maturity.

No fair value information is disclosed for financial assets and financial liabilities not measured

at fair value if the carrying amount is a reasonable approximation of fair value.

Fair value measurement of non-financial instruments

The following table shows the Group’s valuation technique used in measuring the fair value

of the non-financial instruments, as well as the significant unobservable inputs used.

Type

Valuation

technique

Significant

unobservable

inputs

Inter-relationship

between key

unobservable inputs and

fair value measurement

Land use rights –2015 and 2016

Market approach Adjustment factor The estimated fair value would increase (decrease) if adjustment factor was favourable/(not favourable).

Property, plant and equipment –2015 and 2016

Cost approach Price trend indexes Obsolescence factor

The estimated fair value would increase (decrease) if:– Price trend indexes were

higher (lower)– Obsolescence factor was

lower (higher)

Biological assets – 2015 M a n a g e m e n t ’ s internal estimations using recent market prices of similar assets

Estimated market prices

The estimated fair value would increase (decrease) if estimated market prices was higher (lower).

Biological assets – 2016 Market approach

Cost approach

Estimated market price

The estimated fair value would increase (decrease) if estimated market price was higher (lower).

The estimated fair value would increase (decrease) if estimated spawning costs was higher (lower).

Derivative liability – 2015 and 2016

Binomial option pricing model

Discount rate Volatility

The estimated fair value would increase/(decrease) if:– Discount rate was (lower)

higher– Volatility was higher

(lower)

Page 108




Fair value of financial liabilities measured at amortised cost

Management had assumed the carrying values of loans from shareholders and loans from

third parties approximated their fair values at 31 December 2015 and 2016.

Level 3 fair value measurement

The reconciliation of the carrying amount of non-financial assets classified within Level 3

is disclosed under Note 4 (Property, plant and equipment), Note 5 (Prepaid leases), and

Note 10 (Biological assets).

32 Capital management

The Group’s and Company’s objectives when managing capital are:

(a) To safeguard the Group’s ability to continue as a going concern;

(b) To support the Group’s stability and growth;

(c) To provide capital for the purpose of strengthening the Group’s risk management

capability; and

(d) To provide an adequate return to shareholders.

The Group and Company review from time to time their capital structures to ensure optimal

capital structure and shareholder returns, taking into consideration the future capital

requirements of the Group’s and Company’s capital efficiency, prevailing and projected

profitability, projected operating cash flows, projected capital expenditures and projected

strategic investment opportunities. The Group and Company currently does not adopt any

formal dividend policy.

The Board of Directors monitors capital based on net debt to total equity ratio. Net debt

comprises total borrowings (loans and borrowings and convertible loans) less cash and bank

balances. Net asset comprises total equity.

There were no changes in the Group’s and Company’s approach to capital management

during the year.

Page 109


32 Capital management (Cont’d)

The Company and its subsidiaries are not subject to externally imposed capital requirements.

The subsidiaries in the PRC have complied with the statutory surplus reserve fund

requirements. Other than the above, the Company and the rest of the subsidiaries are not

subject to externally imposed capital requirements.


2016 2015 2016 2015

RMB’000 RMB’000 RMB’000 RMB’000

Total borrowings 368,861 343,415 368,861 343,415

Less: cash and

bank balances (9,545) (2,209) (3,170) (151)

Net debt 359,316 341,206 365,691 343,264

Total equity/(deficit in

total equity) (490,798) (397,763) (419,103) (358,330)

Net debt to total equity

ratio (times) # # # #

# Not presented due to deficit in total equity.

33 Subsequent events

Proposed debt restructuring

On 25 January 2017, the Company announced that it had entered into a binding term sheet

with key creditors, comprising the holders of convertible bonds and a third party lender

to waive S$31.87 million of the debts owed by the Company and convert S$29.57 million of

the debts owed by the Company into new ordinary shares in the Company. This proposed

debt restructuring is subject to, inter alia, (a) the approval of a scheme of arrangement

(“Scheme”) by the requisite majority of the Company’s creditors being obtained at a duly

convened Court meeting; (b) the approval of the Scheme by the Court being obtained; (c) the

approval-in-principle of the Singapore Exchange Securities Trading Limited (“SGX-ST”)

being obtained for the listing and quotation of the new shares; (d) a waiver in writing being

obtained from the Securities Industry Council waiving the requirement of any creditor of

the Company to make a mandatory takeover offer under Rule 14 of the Singapore Code on

Take-overs and Mergers (“Whitewash Waiver”); (e) the approval of the requisite majority

of the shareholders of the Company being obtained at a general meeting for, among other

things, the Whitewash Waiver and the allotment and issuance of the New Shares; and (f) all

other approvals and consents necessary or desirable for the proposed restructuring being

obtained by the Company and/or each of its creditors.

Page 110


33 Subsequent events (Cont’d)

Proposed debt restructuring (Cont’d)

On 26 July 2017, the Company announced that it had entered into conditional definitive

agreements with the holders of the convertible bonds, certain key creditors (the “Creditors”),

new investors (the “New Investors”) and directors of the Company involving (collectively

the “Parties”), inter alia:

• an assignment by the holders of the convertible bonds of an aggregate amount of

S$31,960,038 owed by the Company to date amount of SGD31,960,038 to the New

Investors (the “Rebalancing Exercise”);

• a conversion of part of the debt due to Parties in an aggregate amount of S$64,665,278

into 16,370,956,473 new ordinary shares in the capital of the Company; and

• a subscription of 1,518,987,342 new ordinary shares in the capital of the Company by

the New Investors for consideration of S$6,000,000.

Following the Rebalancing Exercise, the remaining balance of the convertible bonds will be

repaid in full by the Company using the proceeds from the disposal of the abalone farms as

described in the caption “Compulsory acquisition of abalone farms” below and issue of new

ordinary shares in the capital of the Company.

Compulsory acquisition of abalone farms

On 2 March 2017, a wholly owned subsidiary of the Group has been informed intention of

Gulei Zhen People’s Government (the “PRC Authority”) to compulsorily acquire 13 of its

abalone farms for the purpose of urban planning by the PRC Authority. The subsidiary has

received from the PRC Authority duly executed compensation agreements, the terms of which

include but are not limited to the amount of compensation for the compulsory acquisition as

well as the further steps involved for the completion of the compulsory acquisition. The gross

aggregate compensation amount stated in the compensation agreements is RMB182,512,767

(approximately S$38,000,000) but the amount is subject to revisions and adjustments by

the PRC Authority. Receipt of the proceeds is expected during the financial year 2017.

The Company will continue to work with its consultants and advisors to minimise the various

charges and fees and maximise the net compensation amount. The Company intends to

utilise S$12,828,452 of the compensation amount towards repayment of the convertible

loans, as described under the caption “Proposed debt restructuring” above. The balance of

the proceeds will be used for general working capital purposes and to fund the Company’s

growth strategies.

Page 111



Issuance of new shares pursuant to exercise of warrants

Pursuant to the exercise of 47,237,779 warrants by the financing shareholders, the Company

has allotted and issued an aggregate of 47,237,779 ordinary shares in the capital of the

Company on 4 April 2017 at the exercise price of S$0.013 each. The sum of approximately

S$614,000, being the exercise amount, is paid through the cancellation of an equivalent

amount of debt due from the Company to the financing shareholders.

Following the above issuance of new shares, the total number of shares in the Company

has increased from 4,566,852,832 shares to 4,614,090,611 shares and the total outstanding

warrants to subscribe for new shares in the capital of the Company are 3,678,761,495.

Incorporation of new subsidiaries

The Group has incorporated a new wholly-owned subsidiary, Oceanus Tech Pte Ltd

(“Oceanus Tech”), in Singapore on 10 April 2017 with the initial issued share capital of

S$1,000 comprising 1,000 ordinary shares.

The Group’s incorporation of Oceanus Tech is in line with the Group’s business plans.

Placement on the Watch-List

On 2 June 2017, the Company announced that the Singapore Exchange Securities Trading

Limited (the “SGX-ST”) has notified the Company that pursuant to Rule 1311(1), it will

continue to be placed on the Watch-List with effect from 5 June 2017 due to the financial

entry criteria. The Company must take active steps to meet the requirements of Listing

Rule 1314(1) of the Listing Manual of the SGX-ST (the “Listing Manual”) for its removal from

Watch-List within 36 months from 5 June 2017, failing which the SGX-ST may either remove

the Company from the official list of the SGX-ST (the “Official List”) or suspend trading of

the Company with a view to remove the Company from the Official List.

Incorporation of a joint venture company

The Company and BNY Abalone World Factory Outlet Pty Ltd (“BNY”) have entered into a

collaboration agreement on 27 July 2017 (the “Collaboration”). The Collaboration involves the

cooperation of the Company and BNY to, inter alia, (a) engage in the sale, procurement and

production of abalone products within and outside of Australia; and (b) engage in research

and development activities with respect to improving the production facilities of BNY and

developing new technologies for production of abalone, formulating new ingredients and

products.

Page 112



Incorporation of a joint venture company (Cont’d)

To implement the Collaboration, the Company will: (a) incorporate a joint venture company

in Singapore (“SG JV Co”), to which the Company will subscribe for such number of ordinary

shares representing 60% of the issued and paid-up capital of the SG JV Co (“SG JV Co

Shares”), while the founding shareholders of BNY will subscribe for the remaining 40% of the

SG JV Co Shares; and (b) acquire such shares representing 60% of the issued and paid-up

capital (“Acquisition Shares’) of BNY (the “Acquisition”).

The Group has established the joint venture company, Oceanus Australia Abalone World

(S) Pte Ltd (“OAAW”), in Singapore on 2 August 2017 with the initial issued share capital of

S$300,000 comprising 300,000 ordinary shares. Oceanus Food Group Pte Ltd, a wholly-

owned subsidiary of the Company subscribed for 180,000 shares representing 60% and the

founding shareholders of BNY subscribed for 120,000 shares representing 40%, of the issued

and paid-up capital of OAAW.

The principal activities of OAAW are those related to international sales and procurement

of farm abalones in China.

34 Prior year reclassifications

As at 31 December 2015, convertible loan due to a lender was classified within non-current

portion of loans and borrowings instead of non-current portion of convertible loans.

Directors have considered it appropriate to restate the financial statements of the prior

financial year.

The prior year reclassifications had no material impact to the financial position or

performance of the Group and the Company as at and for the year ended 31 December 2015.

As reported Reclassification As restated

The Group and The Company RMB’000 RMB’000 RMB’000

Statement of financial position as at

31 December 2015

Non-current liabilities

– Convertible loans 295,312 42,199 337,511

– Loans and borrowings 48,103 (42,199) 5,904

35 Comparative figures

Certain amounts in the comparative information have been reclassified to conform with

current year financial statement presentations due to prior year reclassifications as set out

in Note 24.

STATISTICS OF SHAREHOLDINGS

Page 114

Statistics of ShareholdingsAs at 24 November 2017

Issued and fully paid-up capital : S$482,972,703.70

Number of shares : 4,614,090,611

Class of shares : Ordinary shares

Voting rights : One vote per share

The Company does not hold any treasury shares

DISTRIBUTION OF SHAREHOLDINGS

SIZE OF SHAREHOLDINGS

NO. OF

SHAREHOLDERS % NO. OF SHARES %

1 – 99 70 0.82 2,380 0.00

100 – 1,000 225 2.64 167,534 0.00

1,001 – 10,000 1,545 18.11 12,197,848 0.27

10,001 – 1,000,000 6,273 73.53 951,877,787 20.63

1,000,001 AND ABOVE 418 4.90 3,649,845,062 79.10

TOTAL 8,531 100.00 4,614,090,611 100.00

TWENTY LARGEST SHAREHOLDERS

NO. NAME NO. OF SHARES %

1 CITIBANK NOMINEES SINGAPORE PTE LTD 491,061,303 10.64

2 UOB KAY HIAN PRIVATE LIMITED 415,418,132 9.00

3 KEE POIR MOK 175,234,975 3.80

4 BNP PARIBAS NOMINEES SINGAPORE PTE LTD 164,693,954 3.57

5 DBS NOMINEES PTE LTD 160,342,630 3.48

6 OCBC SECURITIES PRIVATE LIMITED 142,927,356 3.10

7 XU SHUN CHENG @PERMAN YADI 120,000,068 2.60

8 THOMAS CHAN HO LAM 98,654,281 2.14

9 UNITED OVERSEAS BANK NOMINEES (PRIVATE) LIMITED 70,585,978 1.53

10 OCBC NOMINEES SINGAPORE PRIVATE LIMITED 64,712,267 1.40

11 TAN CHAI HONG OR TAN KAY SIM 62,376,900 1.35

12 RAFFLES NOMINEES (PTE) LIMITED 60,314,153 1.31

13 MAYBANK KIM ENG SECURITIES PTE. LTD. 45,657,485 0.99

14 PHILLIP SECURITIES PTE LTD 34,949,110 0.76

15 CHIA SOK HUANG 33,000,000 0.72

16 TAN WANG CHEOW 29,919,000 0.65

17 KGI SECURITIES (SINGAPORE) PTE. LTD. 25,857,000 0.56

18 STEPHEN YEO MAH AI 24,350,200 0.53

19 NG BIE TJIN @ DJUNIARTI INTAN 24,100,000 0.52

20 KITADA TOMOYUKI 23,888,889 0.52

TOTAL 2,268,043,681 49.17

Page 115

Statistics of ShareholdingsAs at 24 November 2017

SUBSTANTIAL SHAREHOLDERS

(As recorded in the Register of Substantial Shareholders as at 24 November 2017)

Direct Interest Deemed Interest

Name No. of Shares %* No. of Shares %*

Ocean Wonder International Limited 403,440,804 8.74 – –

BW Investment Limited 281,458,890 6.10 – –

AIF Capital Asia Ill, L.P. – – 403,440,8041 8.74

AIF Capital Asia Ill GP Limited – – 403,440,8041 8.74

AIF Capital Partners Holdings, L.P. – – 403,440,8041 8.74

AIF Capital Partners, Ltd. – – 403,440,8041 8.74

Peter F. Amour – – 403,440,8041 8.74

Varina Group Limited – – 403,440,8041 8.74

Po Shing Andy Tse – – 403,440,8041 8.74

Theresa Yuk Mui Chung – – 403,440,8041 8.74

Borrelli Walsh Asia Limited – – 281,458,8902 6.10

Bombay Bicycle Club Limited – – 281,458,8902 6.10

G Jacqueline Fangonil Walsh – – 281,458,8902 6.10

Cosimo Borrelli – – 281,458,8902 6.10

Notes:

* Computed based on 4,614,090,611 shares, being the total number of issued voting shares of the Company.

1 AIF Capital Asia Ill, L.P. (“AIF LP”) is the sole shareholder of Ocean Wonder International Limited (“OWIL”) and accordingly

holds more than 50% of the voting rights in OWIL. AIF Capital Asia III GP Limited (“AIF GP”) is the general partner of AIF LP.

AIF Capital Partners Holdings, L.P. (“AIF CPH LP”) is the sole shareholder of AIF GP and accordingly holds more than 50% of

the voting rights in AIF GP.

AIF Capital Partners, Ltd. (“AIF Ltd”) is the general partner of AIF CPH LP. Peter F. Amour (“PFA”), Po Shing Andy Tse and

Theresa Yuk Mui Chung each holds not less than 20% of the voting rights in AIF Ltd.

Varina Group Limited (“VGL”) holds not less than 20% of the voting rights in AIF CPH LP. Asian Corporate Advisers Limited

(“ACAL”) is the sole shareholder of VGL and accordingly holds more than 50% of the voting rights in VGL. ACAL holds all the

shares of VGL as bare trustee in trust for the benefit of PFA.

2 Borrelli Walsh Asia Limited (“BWAL”) is the sole shareholder of BW Investment Limited (“BWIL”) and accordingly holds more

than 50% of the voting rights in BWIL. Bombay Bicycle Club Limited (“BBCL”) holds 56.5% of the shares in BWAL (being more

than 50% of the voting rights in BWAL). Jacqueline Walsh and Cosimo Borrelli respectively hold 25% of the shares in BBCL

(being not less than 20% of the voting rights of BBCL) and 75% of the shares in BBCL (being more than 50% of the voting

rights in BBCL).

FREE FLOAT

Based on the information provided to the Company as at 24 November 2017, approximately 81.12%

of the issued ordinary shares of the Company was held by the public. Accordingly, Rule 723 of the

Listing Manual of the Singapore Exchange Securities Trading Limited has been complied with.

ANNUALGENERALMEETING

Page 117

Notice of Annual General Meeting

OCEANUS GROUP LIMITED

(Incorporated in the Republic of Singapore)

(Company Registration Number: 199805793D)

(Company)

NOTICE IS HEREBY GIVEN that the Annual General Meeting (“AGM”) of Oceanus Group Limited

(the “Company”) will be held at Capital Tower, STI Auditorium (Level 9), 168 Robinson Road,

Singapore 068912 on Tuesday, 19 December 2017 at 1.00 p.m., for the following purposes:

As Ordinary Business

1. To receive and adopt the Audited Financial Statements for the financial year ended

31 December 2016 together with the Directors’ Statement and the Independent Auditor’s

Report. (Resolution 1)

2. To re-elect Mr Wong Ann Chai, being a Director who retires pursuant to Article 107 of the

Constitution of the Company. [see Explanatory Note 1] (Resolution 2)

3. To re-elect Mr Stephen Lee, being a Director who retires pursuant to Article 107 of the

Constitution of the Company. [see Explanatory Note 2] (Resolution 3)

4. To approve the payment of Directors’ fees of S$128,000 for the financial year ending

31 December 2017, to be paid quarterly in arrears. [2016:S$119,000] (Resolution 4)

5. To re-appoint Messrs Foo Kon Tan LLP as Auditors and to authorise the Directors to fix their

remuneration. (Resolution 5)

6. To transact any other business that may be properly transacted at an AGM

Page 118


As Special Business:

To consider and if deemed fit, to pass, with or without modifications, the following Ordinary

Resolutions:

7. AUTHORITY TO ALLOT AND ISUUE SHARES

“That pursuant to Section 161 of the Companies Act, Chapter 50 of Singapore

(the “Companies Act”) and the listing rules of the Singapore Exchange Securities Trading

Limited (the “SGX-ST”), authority be and is hereby given to the Directors of the Company to:

1. (i) issue and allot shares in the capital of the Company (“Shares”) (whether by way

of rights, bonus or otherwise); and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that may

or would require Shares to be issued, including but not limited to the creation

and issue of warrants, debentures or other instruments convertible into Shares,

at any time and upon such terms and conditions and for such purposes and to such

persons as the Directors may in their absolute discretion deem fit; and

2. (notwithstanding that the authority conferred by this Resolution may have ceased

to be in force) issue Shares in pursuance of any Instrument made or granted by the

Directors while this Resolution was in force, provided that:–

(a) the aggregate number of Shares to be issued pursuant to this Resolution

(including shares to be issued in pursuance of Instruments made or granted

pursuant to this Resolution) does not exceed 50% of the total number of issued

Shares (excluding treasury shares and subsidiary holdings, if any) (as calculated

in accordance with sub-paragraph (b) below), of which the aggregate number

of Shares to be issued other than on a pro rata basis to existing shareholders of

the Company (including shares to be issued in pursuance of Instruments made

or granted pursuant to this Resolution) does not exceed 20% of the total number

of issued Shares (excluding treasury shares and subsidiary holdings, if any)

(as calculated in accordance with sub-paragraph (b) below);

(b) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose

of determining the aggregate number of Shares that may be issued under

sub-paragraph (a) above, the total number of issued Share shall be calculated

based on the total number of issued Shares (excluding treasury shares and

subsidiary holdings, if any) in the share capital of the Company at the time of

the passing of this Resolution, after adjusting for:

(i) new Shares arising from the conversion or exercise of any convertible

securities;

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(ii) new Shares arising from exercise of share options or vesting of share awards

outstanding or subsisting at the time of the passing of this Resolution,

provided the options or awards were granted in compliance with the Listing

Manual of the SGX-ST; and

(iii) any subsequent bonus issue, consolidation or subdivision of Shares;

(c) in exercising the authority conferred by this Resolution, the Company shall comply

with the provisions of the Companies Act and Listing Manual of the SGX-ST for

the time being in force (unless such compliance has been waived by the SGX-ST)

and the Constitution for the time being of the Company; and

(d) unless revoked or varied by the Company in general meeting, the authority

conferred by this Resolution shall continue in force until the conclusion of the

next AGM of the Company or the date by which the next AGM of the Company is

required by law to be held whichever is the earlier.

[See Explanatory Note 3] (Resolution 6)

By Order of the Board

Peter Koh Heng Kang

Executive Director and Chief Executive Officer

Singapore, 4 December 2017

Explanatory Notes:

(1) Ordinary Resolution 2 – Mr Wong Ann Chai will, upon re-election, remain as an Independent

Director and Chairmen of the Nominating Committee and Remuneration Committee of the

Company and he will be considered independent.

(2) Ordinary Resolution 3 – Mr Stephen Lee will, upon re-election, remain as a Non-Executive

Director and a member of the Audit Committee, Nominating Committee and the Remuneration

Committee of the Company.

(3) Ordinary Resolution 6 – if passed, will empower the Directors of the Company, effective until

(i) the conclusion of the next AGM of the Company, or (ii) the date by which the next AGM

of the Company is required by law to be held or (iii) the date on which such authority is

varied or revoked by the Company in a general meeting, whichever is the earliest, to issue

Shares, make or grant Instruments convertible into Shares and to issue Shares pursuant

to such Instruments, up to a number not exceeding, in total, 50% of total number of issued

Shares (excluding treasury shares and subsidiary holdings, if any), of which up to 20% may

be issued other than on a pro-rata basis to existing shareholders of the Company.

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For determining the aggregate number of Shares that may be issued, the total number of

issued Shares will be calculated based on the total number of issued Shares (excluding

treasury shares and subsidiary holdings, if any) at the time this Resolution is passed, after

adjusting for:–

(a) new Shares arising from the conversion or exercise of any convertible securities;

(b) new Shares arising from the exercise of share options or vesting of share awards

outstanding or subsisting at the time of the passing of this Resolution; and

(c) any subsequent bonus issue, consolidation or subdivision of Shares.

Notes:

1. Each of the resolutions to be put to the vote of members at the AGM (and at any adjournment

thereof) will be voted by way of a poll.

2. (a) A member of the Company who is not a relevant intermediary is entitled to appoint not

more than two proxies to attend, speak and vote at the AGM. Where such member’s

form of proxy appoints more than one proxy, the proportion of the shareholding

concerned to be represented by each proxy shall be specified in the form of proxy.

(b) A member of the Company who is a relevant intermediary is entitled to appoint more

than two proxies to attend, speak and vote at the AGM, but each proxy must be

appointed to exercise the rights attached to a different share or shares held by such

member. Where such member’s form of proxy appoints more than two proxies, the

number and class of shares in relation to which each proxy has been appointed shall

be specified in the form of proxy.

“relevant intermediary” has the meaning ascribed to it in Section 181 of the Companies Act,

Cap. 50.

3. A proxy need not be a member of the Company. An instrument appointing a proxy must be

deposited at the registered office of the Company, 31 Harrison Road #11-03/04 Food Empire

Building, Singapore 369649, not less than 48 hours before the time for holding the AGM or

any adjournment thereof.

4. The instrument appointing a proxy must be signed by the appointor or his attorney. Where

the instrument appointing a proxy or proxies is executed by a corporation, it must be either

executed under its common seal or signed on its behalf by an attorney or a duly authorized

officer of the corporation.

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Personal data privacy

By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak

and vote at the AGM and/or any adjournment thereof, a member of the Company (i) consents to

the collection, use and disclosure of the member’s personal data by the Company (or its agents

or service providers) for the purpose of the processing, administration and analysis by the

Company (or its agents or service providers) of proxies and representatives appointed for the

AGM (including any adjournment thereof) and the preparation and compilation of the attendance

lists, minutes and other documents relating to the AGM (including any adjournment thereof),

and in order for the Company (or its agents or service providers) to comply with any applicable

laws, listing rules, take-over rules, regulations and/or guidelines (collectively, the “Purposes”),

(ii) warrants that where the member discloses the personal data of the member’s proxy(ies)

and/or representative(s) to the Company (or its agents or service providers), the member has

obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use

and disclosure by the Company (or its agents or service providers) of the personal data of

such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member

will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and

damages as a result of the member’s breach of warranty.

OCEANUS GROUP LIMITED(Incorporated in the Republic of Singapore)

(Company Reg. No. 199805793D)

PROXY FORM – ANNUAL GENERAL MEETING

IMPORTANT

1. Relevant Intermediaries (as defined in Section 181 of the

Companies Act, Chapter 50 of Singapore), may appoint

more than two proxies to attend and vote at the Annual

General Meeting.

2. For CPF/SRS investors who have used their CPF/SRS

monies to buy Oceanus Group Limited shares, this Proxy

Form is not valid for use by CPF/SRS investors and shall be

ineffective for all intents and purposes if used or purported

to be used by them. CPF/SRS investors should contact their

respective Agent Banks/SRS Operators if they have any

queries regarding their appointment as proxies.

Personal Data Privacy

By submitting an instrument appointing a proxy(ies) and/or

representative(s), the member accepts and agrees to the

personal data privacy terms set out in the Notice of Annual

General Meeting dated 4 December 2017.

I/We, (name) of

(address)

being a member/members of OCEANUS GROUP LIMITED (the “Company”), hereby appoint:

Name Address

NRIC/

Passport No.

Proportion of

Shareholdings

No. of Shares %

and/or (delete as appropriate)

Name Address

NRIC/

Passport No.

Proportion of

Shareholdings

No. of Shares %

as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll at

the Annual General Meeting of the Company to be held at Capital Tower, STI Auditorium (Level 9), 168 Robinson

Road, Singapore 068912 on Tuesday, 19 December 2017 at 1.00 p.m. and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against

the resolutions as set out in the Notice of Annual General Meeting. In the absence of specific directions, the

proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the

Annual General Meeting).

No. ORDINARY RESOLUTIONS For Against

1 Adoption of the Audited Financial Statements for the financial year

ended 31 December 2016, together with the Directors’ Statement and the

Independent Auditor’s Report.

2 Re-election of Mr Wong Ann Chai as a Director.

3 Re-election of Mr Stephen Lee as a Director.

4 Approval of payment of Directors’ fees of S$128,000 for the financial year

ending 31 December 2016, to be paid quarterly in arrears. (2016: S$119,000)

5 Re-appointment of Messrs Foo Kon Tan LLP as Independent Auditor.

6 Authority to allot and issue Shares.

Date this day of 2017

Signature(s) of member(s) or Common Seal

Total Number of Shares held in:

CDP Register

Register of Members

IMPORTANT: PLEASE READ THE NOTES OVERLEAF

NOTES:

1. A member should insert the total number of shares held. If the member has shares entered against his name in

the Depository Register (maintained by The Central Depository (Pte) Limited), he should insert that number of

shares. If the member has shares registered in his name in the Register of Members (maintained by or on behalf of

the Company), he should insert that number of shares. If the member has shares entered against his name in the

Depository Register and shares registered in his name in the Register of Members, he should insert the aggregate

number of shares. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate

to all the shares held by the member.

2. (a) A member of the Company who is not a relevant intermediary is entitled to appoint one or two proxies to

attend, speak and vote at the Annual General Meeting. Where such member’s form of proxy appoints more than

one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified

in the form of proxy.

(b) A member of the Company who is a relevant intermediary is entitled to appoint more than two proxies to

attend, speak and vote at the Annual General Meeting, but each proxy must be appointed to exercise the rights

attached to a different share or shares held by such member. Where such member’s form of proxy appoints

more than two proxies, the number and class of shares in relation to which each proxy has been appointed

shall be specified in the form of proxy.

(c) “Relevant Intermediary” has the meaning ascribed to it in Section 181 of the Companies Act, Chapter 50 of

Singapore.

3. A proxy need not be a member of the Company.

4. The instrument appointing a proxy or proxies must be deposited at the Registered Office of the Company at

31 Harrison Road #11-03/04, Food Empire Building, Singapore 369649 not less than 48 hours before the time set

for the Annual General Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly

authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must

be executed either under the hand of an officer or attorney duly authorised.

6. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the

power of attorney (or other authority) or a duly certified copy thereof must (failing previous registration with the

Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

7. A corporation which is a member may authorise by resolution of its directors or other governing body such person

as it thinks fit to act as its representative at the meeting, in accordance with Section 179 of the Companies Act,

Chapter 50.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly

completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the

appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of shares entered in the

Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being

the appointor, is not shown to have shares entered against his/her name in the Depository Register as at seventy-two

(72) hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository

(Pte) Limited to the Company.

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MAKING BIG STRIDES FORWARD - Singapore Exchange€¦ · During the financial year, we’ve achieved great progress in our negotiations with key creditors for the debt restructuring